Transcript
Speaker: Hello from HSBC Hong Kong and welcome to Under the Banyard Tree with me, Harold van Linde, Head of Asian Equity Strategy. And me, Fred Newman, Chief Asia Economist. This is a podcast where we put Asian markets and economics in context. Absolutely right. Today we're joined by our colleague and good friend of the podcast, Prun Agarck, to look at a sector very much on the rise in Asia, medical tourism.
Speaker: Think travel, technology, pharma, insurance, hospitals, all part of a rapidly growing trend across the Asian region. New centers of expertise are emerging as demand spreads far and wide. From India to Korea to Thailand and beyond, we've got it all covered right here under the banyan tree.
Speaker: We always like to start a apart with some big facts and figures. Just in case anyone isn't familiar, medical tourism is, as the name suggests, traveling abroad for medical purposes. So you need ah a knee replacement and you travel to, let's say, Thailand to do to do it. That's medical tourism. Now, 14 million people globally travel for some treatment every year. And over half of that is in Asia. So Asia really dominates this sort of thing.
Speaker: That's right. And get this. In the U.S., a heart bypass surgery costs around 130,000 U.S. dollars. And that same bypass in Thailand costs more like $15,000. In India, you can actually get it for $5,000. So it's a bargain. Yeah, exactly. But it's not just cost… that driving the medical tourism boom. Many Asian countries are actually focusing this as a growth sector. They're specializing in certain areas of it. So for example, most people I think know Korea is really big in cosmetic surgery. India is really big in cardiac surgery and care. Singapore is leading the way with high-end robotic surgery and and these sort of things. Now we're talking about this and, well, welcome to the podcast, Pruna.
Speaker: Thanks, Harold. Great be back. Welcome back. I think she's almost a regular. She would make your co-host. Exactly. Now, Pruna, most people, when they think about medical tourism, it's about your flight to Thailand, get your knee replacement or… your whatever it is, ah sorted out while you're at a resort. Health case, I think it was called. That was the big thing. But you're saying things have changed a bit, right? Things have changed. One, Thailand has moved much up the value chain. So now people go to Thailand for much serious and advanced treatments. And it's just not Thailand in Asia. ah The health tourism as a trend has sprinted fast in the rest of the region. Think about Malaysia. It's gone up actually because I thought with COVID, travel came down, people don't do this anymore. years because people were not traveling, this industry did take a bad hit. But I would say since 2022, it's been just going in one direction and that direction is going up.
Speaker: and but But why is that? I mean, why do suddenly people who start to travel for medical treatment? I mean, why not get it where they used to get it? Like what triggered that new wave of of people actually trying to get medical care in other countries? I would say people had always been traveling. For example, Turkey was known that people would get go there for a hair transplant. But now the multiple reasons. One, the cost of health care is rising pretty fast in the West. So they need more affordable health care. Second, the world in general is aging, right? Once you cross 40, the number of treatments you need or the regular health checkups that you want to undergo, they increase in quantity. And thirdly, over time, the Asian hospitals have built a credible reputation for themselves. And now people feel much more comfortable getting the surgeries or the procedures done in Asia at probably one tenth of the price. Also, I think waiting lists is also an issue, right? yeah very yeah There are procedures for which like, you know, in UK and US, you have to wait for two, three years before you can even go and see your doctor. But in Asia, you just directly land and you go to the doctor.
Speaker: So so you you describe this in many ways as partly demand that people aging, they have longer wait lines at home, it's been getting more expensive, so they're looking to to go somewhere else. um But he's saying it's also supply in the sense that we have now a specialized industry that really caters to visiting patients. But ah Harold mentioned the introduction Thailand used to be sort of the classic hub where people went for fairly affordable health care checkups, for example.
Speaker: Give us some other examples of sort of the new emerging centers. I remember India was big on heart transplants. India is still big on heart transplant and India is even now, I think if you want the most affordable healthcare care treatment in Asia, people go to India. But the problem with India is the medical tourism, the number has been coming down since the pandemic. Why is that? um I would say partially because the medical tourism was quite a concentrated industry in India. Around 65% of the inbound tourists that would come there for a health checkup originated just from Bangladesh. Wait, this is an important point because so far we talked about waiting lists in the West and it's much cheaper. So if you're in the UK or in the US, you go to another place.
Speaker: I don't think those people would go to India. That's what I was thinking of when you were talking. And that's what you say, right? It's actually the other growth area is that there are Bangladesh, ah Indonesia, maybe be large countries, lots of people where the existing health care is just not so good. And they to other places. So there are broadly two cohorts of people. One are the people from developed countries that come to Asia, mainly because of the cost and speed, but also from developing countries like Bangladesh, Laos, Cambodia, where the health care infrastructure in the country is not that well developed. And they go to relatively more advanced countries for treatment.
Speaker: But are there enough Bangladeshi that have the capability to go to, to say, Thailand, Singapore even? ah Yes, Haral. Every economy would have ah like you know a proportion of the population that is really well-to-do and would like to go to different countries for treatment. Well, remember, Bangladesh is also not a small country. So even 5% of the Bangladeshi population it translates into several million people. Yeah, you're talking about 10 million people maybe. Exactly, yeah. So that's an interesting point you make. So it's it's not just Western tourists who go for cheaper treatment. It's also the accessibility for people else elsewhere in the world who don't have the health care at home now being able to travel and to get – to get the treatment. so So that's certainly that. But we we mentioned ah India, obviously, numbers have come down a little bit. They were always very good in cardiac kind of care. What are some of the other centers? but We have Thailand, obviously, classic. I would say Korea stands out as one of the fastest growing center for medical tourism. And it has really established a wonderful reputation itself as the Medical Tourism Center for Cosmetics.
Speaker: So cosmetic surgery, you mean cosmetic treatment? It might not be surgery. It can be like, you know, skin boosters and getting your ah jaw structure changed and ah the fillers and very minimal invasive treatments. yeah But these treatments can be very expensive. Last year, around 3 million people came to Korea for cosmetic and derma treatments. And that that is two times bigger than the number we saw in 2024. So the number has tripled in two years. And that's probably because of the K culture, the growing fascination towards towards Korean glass skin, but also the advancement Korea has made in this particular sector.
Speaker: yeah so of but there There must be other centers as well. I think you mentioned Malaysia. Malaysia is interesting because one, more than 60% of the people coming to Malaysia come from Indonesia. And that's because of their halal certified medical. That means it's Islamic, it follows Islamic sort of rules, certification, yeah. The geographical proximity, familiarity with the culture or the language. Language. language yeah Yeah. So um and this is becoming a concern for Indonesian government because one, it brings down your domestic activity. This puts a pressure on your currency in your forex. So now Indonesian government is really trying to come up with policies to keep their patients at home. Yeah, I think they're talking in Sanur in Bali about a sort of special medical zone, right? That's right. And now they are are like you know asking the listed hospital chains overseas to set up their hospitals in Bali. um They are attracting foreign educated doctors to come in, like Ayurveda centers, luxury resorts. So they're doing all the sort of things to really make it big and attractive.
Speaker: Just another question. So if you, for example, let's take the guy in the UK, but can also be in another country from my part, say yeah mainland China, Taiwan doesn't matter too much. and You go to another country. Does your insurance then pay for that?
Speaker: It depends, Harold. In the past, people used to pay it out of pocket. But now given medical tourism is such a big sector and every sector wants to be a part of this growth trend, insurance companies are coming up with global packages. And it's even hospitals in Asia that are tying up with insurance companies, asking them to put them on the panel just to make it easy and affordable. would imagine, Harold, that that if you're insurer and you have to pay for somebody's treatment, but it's much cheaper if that person travels. to another country get the same treatment, the insurance company saves money. So they should be encouraging that. Absolutely. That's what I was thinking as well. So they should encourage it. But and then I guess you get some sort of certification as well. What hospital are they going to? Hey, the whatever hospital in ah some city in the middle of Thailand, they might- they're their international certification. So there are, for example, certification called GCI. That's almost a gold standard when it comes to hospitals. And Asia has more than 500 GCI accredited hospitals. So it gives confidence to the insurance company, but also to the patient that they're going to a hospital which has a good reputation. And that has been acknowledged globally. Now, let me ask me last you on that, Perna. I know that Harold, every once in a while, he he lives in Hong Kong, sneaks across the border to Shenzhen in order to get his his wisdom tooth fixed. Yeah, the long gone wisdom as well. But but anyways, but is that is that a form of medical tourism as well? It is. And in fact, like, you know if we compare relatively because of language barriers and all the reason, the medical tourism is still a small sector in mainland China. Most of the hospitals are ah generally like, you know owned by the government, the public hospitals that generally do not want ah to have undue pressure on them by calling the foreign tourists. But medical tourism is ah massively fast growing sector in mainland China. And the Greater Bay Area Belt, that is Guangdong province, Hong Kong and Macau that are trying to form itself as the healthcare hub within this part of the region. So every day there there are hundreds of Hong Kongers and people from Macau that go to Guangdong province, especially to Shenzhen to get their dental treatment done.
Speaker: But that must be quite a competitive market, right? In Guangdong, the whole province. I would say it's quite a competitive industry in the whole of the region. And that is the reason, like, you know, in the last three, four years, we've seen that the growth in medical tourism in Thailand has kind of slowed. And that is the reason all these hubs like, you know, Thailand, Malaysia, Korea, they're trying to carve out their own niche. Korea wants to be known for cosmetic.
Speaker: Thailand wants to be known for luxury wellness along with clinical outcomes. So they are trying to create their heat niche and that's their way to compete with each other. Interesting. Now, this is fascinating. So we have across the region a burgeoning trend of cross-border medical tourism. You're saying that there are different centers of excellence that are really specializations developing across the region.
Speaker: but But what does this really mean if you take – if you look at it from an investor perspective? Are these – some of these companies – are they listed companies? how How should an investor think about that trend? So one, of course, this creates ample growth opportunities for corporates. Intuitively, you would expect hospitals to benefit from it, but it goes much beyond hospitals. Think about pharma companies, insurance companies, even airlines, because when somebody is traveling from Europe to Asia, you need travel. So, like, you know, there is a big avenue of various sectors that benefit from it. I'll give you a very interesting example. Malaysian Airlines has recently tied up with a railway company in France because they want to provide door-to-door travel facility for a French guy who might be coming to London. So wait, so they say you can come to ah a hospital in Penang and we get you the train ticket to the airport. You have the flight is sorted out. We pick you up, bring you to the hospital. You can stay there for two weeks, get done, and we'll bring you back home. So proper door-to-door facility. And then, like, you know, it's not just ah the airlines and the insurers. Melco Resorts, that U.S. listed company that also has... Gaming, you mean a casino the casinos? The casinos. They have built their own in-house hospital.
Speaker: Well, that's great for top line numbers. All these companies trying to attract customers, but it must be good for the margins as It's good for margins because one, um the healthcare tourists, they tend to stay for much longer than, say, a leisure tourist. And second, generally medical tourists now come to Asia for complex procedures. So it's good for the margins for ah for the hospitals and the pharma companies because... These people spend more. They spend more. Fantastic. So this is a growing industry where Asia, to large extent, leads. It's got the building blocks in there, the certification and insurance companies and the travel companies jumping on the back of it. I suspect for most companies, aside from the hospitals, this is still a small side business, right, insurance small. There are few hospitals that get more than three fourths of their revenue just from foreign tourists, especially in Thailand. But I would say for other companies, especially insurers and airlines, like it's still small. It's a growing business, but probably be much bigger 10 years down the line.
Speaker: fantastic And it it feels to me we just scratched the surface here. If I think about the aging trends in Asia, Northeast Asia now, the world's most rapidly aging region. Exactly. And cost pressures on insurance companies. As soon as you have changed the regulations that say a Taiwanese guy can go to Malaysia for his treatment, I think even language barriers are going to be overcome because you just make sure that you have some Chinese-speaking people that can communicate with him. And so this will probably only further intensify, I suspect. Yeah. yeah So, and and that's interesting because we would tend to think of Asian economies built on ah manufacturing exports and goods trade, et cetera. But here it's actually – It's the services. It's the services trade. It's the cross-border services trade which is flourishing surging. yes And and and asia everybody wants to look good.
Speaker: Yeah. You're talking about the Korean cosmetic stuff, but everybody also wants a ticker that actually works. So i'll be gone after fixing my face in Korea, I'll be heading straight to India to fix my heart.
Speaker: Well, that's about all we've got time for Under the Banyan Tree. Thank you, Peruna, for joining us. Thanks, Harold. It was pleasure to be here. Yeah, and thanks for all our listeners for ah tuning in. Remember to subscribe as well wherever you get your podcasts.
Speaker: Under the Ben Entry is an HSBC Global Investment Research production. Our sister podcast, The Macro Brief, is also available on your podcast platform of choice and well worth a listen. That's a wrap from us. Until next week, take care. Until then.
