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What share of total health expenditures comes from private souces?


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Market Analysis

Goldman Sachs coined the term "BRIC" for leading developing market economies - Brazil, Russia, India, and China.

Research indicates that these four countries could become larger than the world’s six most developed countries in the next 40 years.


Read more about the health care in emerging markets with a review of 2006 and outlook for 2007

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. the market environment in which trading takes place

Read more about the Appollo Hospital Group in this feature.

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Journal of Health Investment & Finance

January 1, 2007
Volume 7: Issue 1

Risks & Rewards

Health Investment & Finance provides an analysis of the risks opportunities and rewards of investing in the health sector.

It provides an analysis of some of the best performing companies and leading stock exchanges, as well as assessment of where risks and rewards are the highest.

Understanding investment opportunities in emerging markets requires a full understanding of the interaction between three factors:

the risks and rewards that must be balanced; 

the leadership and managment skills of people who invest in and run the businesses; and

the markets in which they operate.

People

In the Leadership Forum his month, Prathep C. Reddy describes how most essential institutions in society developed in response to an overwhelming need...

Sixteen years ago, I lost a patient in India who couldn't make it to Texas for an open heart surgery.

But now people have the opportunity in India to access the best that healthcare has to offer worldwide.

Our state-of-the-art equipment, backed by the world's best professionals, equals those available globally. To that extent, Apollo's mission may have been accomplished.

Fifteen years into being called a pioneer and leader in revolutionizing healthcare in India may have been ample reason, traditionally, to rest on our laurels.

Not at Apollo though. We realize that today, people measure companies' strengths by an array of more demanding criteria than just who-came-first.

By constantly measuring our deliverables, we have succeeded in creating infrastructure that meets the needs of the future that incorporates the latest technology and provides superior healthcare delivery systems.

Markets

The hospital sector is featured in this issue of Health Investment & Finance.

With over 7,000 beds in 44 hospitals, a string of nursing and hospital management colleges and dual lifelines of pharmacies and diagnostic clinics providing a safety net across Asia, the Apollo Hospitals Group is the largest private healthcare provider in Asia.

It is a healthcare powerhouse you can trust with your life.

Apollo Hospitals unites exceptional clinical success rates and superior technology with centuries-old traditions of Eastern care and warmth. It serves 14 million patients from 55 countries.

Apollo Hospitals Enterprise Limited (AHEL) whic was incorporated as a Public Limited Company in 1979 is listed Company on the Bombay Stock Exchange (BSE-APLH.BO).

Today AHEL is the leading private sector healthcare provider in Asia and owns and manages a network of specialty hospitals and clinics, a chain of Pharmacy retail outlets across the country, and provides Consultancy Services for commissioning and managing the Specialty Hospitals.


The Journal of Health Investment & Finance is a leading ePublication that explores issues of interest
to investors and the business community working in the health sector. The 
Journal contains all
the articles from the online
Policy Watch and selected archive issues.

Health Investment & Finance is pleased to offer

Free Access to the Journal for low-income countries,
and is a signatory to the
DC Principles for Free Access to Science
.


Health Investment & Finance Corporation
© All Rights Reserved


Journal of Health Investment & Finance

January 1, 2007
Volume 7: Issue 1

This issue looks at the financial crisis and its impact on the health care industry.


Editor's Choice

Editorial

Investment Risk of Politics

This Editorial describes how politics plays a pervasive role in the debate on public and private engagement in the health sector.



OpEd

Investment Climate

This OpEd discusses how every day, firms and entrepreneurs around the world face important choices in terms of the investment climate in which they work.




TABLE OF CONTENTS


MAIN MENU

Home Page: Alexander Preker
Home Page


Journal

Journal Main: Journal Editor
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Cover Page: Journal Editor
Cover Page
Table of Contents: Editorial Staff
Table of Contents


Debate

Debate Main: Editorial Staff
When, Where, How, and to What Degree Should Governments Intervene
Viewpoint: Alexander Preker
Economics of Public and Private Roles in Health Care
Editorial: Editorial Staff
Investment Risk of Politics
OpEd: Editorial Staff
Investment Climate


Analysis

Analysis Main: Editorial Staff
Health Care in Emerging Markets
InDepth: Alexander Preker
Private Participation in Health Care
Review: Alexander Preker
2006 A Vintage Year
Outlook: Alexander Preker
What's in Store for 2007?




Profiles Main: Editorial Staff
Health Care Powerhouse in South Asia
Market in Focus:
New York Stock Exchange (NYSE)

The Journal of Health Investment & Finance is a leading ePublication that explores issues of interest
to investors and the business community working in the health sector. The 
Journal contains all
the articles from the online
Policy Watch and selected archive issues.

Health Investment & Finance is pleased to offer

Free Access to the Journal for low-income countries,
and is a signatory to the
DC Principles for Free Access to Science
.


Health Investment & Finance Corporation
© All Rights Reserved


Crossfire


The Debate Main section of Health Investment & Finance provides a more detailed analysis of topical subjects that may be of interest to investors and industry leaders looking for advice or capital.

When, where, how, and to what degree should governments intervene in the health sector and when should they leave things to market forces and demand from patients? Read more on what governments can and cannot do, and how the private sector can support both social and commercial goals in the health care industry.

 

Opinions


Viewpoint

Economics of Public and Private Roles.  More ...


Editorial

The investment risk of ideology.  More ...


OpEd

What governments can and cannot do.  More ...

Speak Up and Be Heard

Forum

Participate in this debate through the Health Investors' Forum.

 

Blog

Share your views on other topics in the Health Investors' Blog.

 

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Viewpoint

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Alexander S. Preker

Economics of Public and Private Roles in Health Care

In this Viewpoint, Alexander S. Preker discusses the role of goverments and the private providers in the health sector.


Both goverments and the private providers play an important role in the health sector.

This is not a new topic. Since the beginning of written history, the pendulum has swung back and forth between a minimalist approach to state involvement in the health sector and varying degrees of a greater role by governments.

As early as the second millennium B.C., the papyri, give fascinating evidence that Imhotep, archetypal physician, priest and court official in ancient Egypt, introduced a system of publicly provided health care with healers who were paid by the community.

This early experiment in organized health care did not survive the test of time. The Code of Hammurabi (1792-1750 BC) laid down, inter alia, a system of direct fee-for-service payment based on the nature of services rendered and the ability of the patient to pay.

For the next three thousand years, involvement of the state in health care revolved mainly around enforcing the rules of compensation for personal injury and protection of the self-governing medical guild.

At best, the financing, organization and provision of health care were limited to the royal courts of kings, emperors and other nobility who typically had physicians for their personal use. while the masses got by with local healers, midwives, natural remedies, apothecaries and quacks.

... From Heavy Handed State Involvement

Unlike this predominant historical role of the private sector in health care, during the 20th Century, governments of most countries became central to health policy, often engaging in both the financing and provision of a wide range of care.

Today, most OECD countries have achieved universal access to health care through a mix of public and private financing arrangements and providers.

Proponents of such involvement by the public sector in health care have argued their case on both philosophical and technical grounds.

In most societies, care for the sick and disabled is considered an expression of humanitarian and philosophical aspirations.

But one does not have to resort to moral principles or arguments about the welfare state to warrant collective intervention in health.

The past 100 years are rich with examples of how the private sector and market forces alone fail to secure efficiency and equity in the health sector.

Economic theory provides ample justification for such an engagement on theoretical and practical grounds to secure efficient and equitable health care for the population.

During the past 50 years, largely inspired by western welfare state experiences such as the British NHS and the problems of market failure, many low- and middle-income countries established state-funded health care systems with services produced by a vertically integrated public bureaucracy.

… Back to Neo-Liberalism of the 1990's

During the 1980s and 1990s, the pendulum began to swing back in the opposite direction.

During the Regan and Thatcher eras, the world witnessed a growing willingness to experiment with market approaches in the social sectors (health, education and social protection).

This was true even in countries such as Great Britain, New Zealand, and Australia that historically had been the bastions of the welfare state.

As in the case of the rise in state involvement in the health care, the recent cooling towards state involvement in health care and enthusiasm for private solutions has been motivated by both ideological and technical arguments.

The political imperative that has accompanied liberalization in many former socialist states and the economic shocks in East Asia and Latin America certainly contributed to a global sense of urgency to reform inefficient and bloated bureaucracies, and to establish smaller governments with greater accountability.

But it would be too easy to blame ideology and economic crises for the recent surge in attempts to reform health care systems by exposing public services to competitive market forces, downsizing the public sector, and increasing private sector participation.

In reality, the welfare state approach failed to address many of the health needs of populations across the world.

Hence the dilemma that policymakers face throughout the world today: although state involvement in the health sector is clearly needed, it is typically fraught with public sector production failure.

Towards a New Stewardship Role of the State...

Governments everywhere are, therefore, reassessing when, where, how, and to what degree to intervene or to leave things to the market forces created by demand from patients.

What are the policy options available to government in improving efficiency or equity; They range from the minimal provision of information to indirect involvement through regulation and contracting, to more direct involvement thorough public subsidies and public production of services.

Governments should exercise their oversight function in securing equity, efficiency, and quality objectives. They can do this through more effective policy making, regulation, contracting, and providing subsidies for those who cannot afford to pay for health care themselves.

At the same time, a strong case can be made for greater private sector participation in financing, provision of health services, and production of inputs - pharmaceuticals, medical equipment, consumables, R&D, and training of human resources.

This type of balance in public and private roles in the health sector would lead to a more effective policy oversight by governments, greater consumer responsiveness and investment opportunities that would attract an increase in private capital flows to the health sector.

Contact details

Alexander S. Preker

President/CEO
Health Investment & Financing
14 Wall Street, 20th Floor
New York, NY
10005
United States of America

Office: 1 (212) 348-1866
Cell: 1 (202) 667-8286
Fax: 1 (212) 348-2866
Email: apreker@healthinvestment.com
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Editorial

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Investment Risk of Politics

This Editorial describes how politics plays a pervasive role in the debate on public and private engagement in the health sector.


Politics plays a pervasive role in the debate on public and private engagement in the health sector.

Political ideology has a significant impact on the investment climate, financial risk, private capital flows and potential for rate of return to investments in the health sector.

The two main rival political ideologies in this field are libertarian and egalitarian.

The libertarian position puts a value on the following principles:

Freedom of choice is good
Individuals are the best judge of their own needs
Societal welfare the sum of individual choices
Achievement should be rewarded
Social needs can be met with private charity
Freedom is an intrinsic value; it should not be sacrificed
Equality before the law is a key concept
Freedom dominates equality when there is a choice


The egalitarian position leads you to a different conclusion:

All members of society should have equal rights to basic goods
Society not individuals should decide which goods are basic
Welfare is determined by how these basic goods are distributed
Lack of achievement should not be punished
Collective methods are needed to ensure people are treated equally
Equality of opportunity is the they concept
Freedom of some may need to be curtailed to increase it for others


Applying these principles to health care systems leads policymakers and investors down two very different paths.

Libertarian approaches lead to a market-oriented health sector and competitive health industry. The US, Switzerland, Netherlands, Australia and other market oriented health systems are often given as examples of this former approach.

Egalitarian approaches lead to a more centrally planned and state dominated health sector. The UK, Scandinavia and former planned health care systems in Central and Easter Europe are often given as examples of the latter approach.

No health system in the world is driven by either pure libertarian or egalitarian principles.

In most countries, the public and private mix has developed slowly over time, through an incremental process of adapting to social, political, economic and cultural realities.

Smart investment opportunities are available under each of these scenarios. But the choices would be very different.

A good understanding of the current and future direction of the underlying political, economic and social forces is therefore critical to making sound investments in the health sector.

Contact details

Editorial Staff

Editorial Staff
170 East 88th Street
New York, NY
10128
United States of America

Office: 1 (212) 348-1866
Fax: 1 (212) 348-2866
Email: estaff@healthfinance.org
web: www.healthfinance.org



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OpEd

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Investment Climate

This OpEd discusses how every day, firms and entrepreneurs around the world face important choices in terms of the investment climate in which they work.


Every day, firms and entrepreneurs around the world make difficult choices in meeting the investment challenges specific to their country and particular context.

These challenges have never been greater than today in the current economic and financial environment.

Decisions taken by investors and business during the nexts few months could play a key role in stimulating economic recovery and growth.

Yet in many ways their decisions will also depend on the economic stimulus package and reforms introduced by governments.

There is general agreement that a good investment climate is essential for growth and poverty reduction. It is less clear is how to achieve this.

Crisis and new governments are important catalysts, but so is the competition generated by trade integration and new benchmarking information.

Stocks in Brazil, South Korea and Russia were recently mainstream holding for emerging market mutual funds. Other new "frontier markets" such as Bangladesh, Cote d'Ivoire, Jamaica, and other countries in Africa, Asia, Eastern Europe and Latin America. Vietnam had already become too pricy.

The frontier markets appealed to investors in developed countries seeking undiscouvered stocks.

Demand for commodities and natural resources found in countries such as South America and Africa also came from the new burgeoning economies of China and India.  Such frontier investments were good because stocks were cheap and overlooked at a time that prices in the bigger emerging markets stocks had already gone up.

The recent financial crisis may turn this story up-side-down, with such marktes once again becoming attractive, being more secure and less risky than the frontier markets.

Law and order are fundamental to creating a stable investment climate in the health sector as it is in other sectors of the economy.

As an example, in the Africa region, countries that have had long-standing political instability, civil strife and wars such as Cote D'Ivoire, Guinea, Liberia, Sierra Leone, Somalia and Zimbabwe, have also had a low rate of investment - domestic and foreign.  This was equally true in the health sector.

Weak public sector governance and corruption have a similar negative impact on capital flows and overall economic development.

But excessive state intervetion also has a negative impact on investments in the health sector.

Years of centralized planning and goverment monoply in the former communist countries of Central and Eastern Europe led to a striking under-investment in the health sector.

A similar observation has been make in the case of the UK during the 1980 and 1990 and in many developing countries where the state health services predominate.

Too little and too much government is therefore bad for investments in general and more specifically in the health sector.

Striking a balance between these two extremes is not always easy. What is often needed by govenments is more "steering" and less "rowing".

A good public policy framework for private sector investments in the health sector, therefore, includes several critical elements:

 

  • Facilitating policy and regulatory environment
  • Enforcement mechanisms
  • Political stability
  • Transparency
  • Competition

 

All of this translated into good governance - one of the most critical elements needed to promote a good investment climate for private sector activities in health care as it is in other sectors of the economy.

This means investing early in the institutions and the process of reform rather than just infrastructure and basic services.

Contact details

Editorial Staff

Editorial Staff
170 East 88th Street
New York, NY
10128
United States of America

Office: 1 (212) 348-1866
Fax: 1 (212) 348-2866
Email: estaff@healthfinance.org
web: www.healthfinance.org



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Analysis

The Analysis Main section of Health Investment & Finance provides a more detailed assessment of topical subjects that may be of interest to investors and industry leaders looking for advice or capital.

The total value of the world's financial assets—including equities, private and government debt securities, and bank deposits—grew faster in 2006 than the historical average rate, climbing by 17 percent to reach $167 trillion.  Meanwhile, cross-border capital flows climbed to a record $8.2 trillion.

In this InDepth Analysis, April Harding discussed the role of private sector participation in health care.   More ...


Review

Emerging markets were the hottest investments during the past few years.

Mutual funds with stocks in Brazil, Russia, India and China became mainstream. 

More ...


Outlook

Looking Ahead to 2007

Gazing in the crystal ball is a tough business. Here are some things some experts are watching for.



Medium-Term Forecast

After years of being the front runner, the recent slow-down in 2006 in the US economy (2.4%) and anticipated sluggish recovery (3.3%) in 2007, lets the rest of the world take the lead.

  

More ...



InDepth

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April L. Harding

Private Participation in Health Care

In this InDepth Analysis, April Harding discussed the role of private sector participation in health care and associate challenges.


Awareness is growing about the importance of the private sector in achieving health sector objectives within developing countries.

Recent household surveys from many of these countries indicate private providers play a significant role in health care delivery, even to the poor (Gwatkin, Rustein, Pande and Wagstaff 2000).

Reviews of disease control and child and reproductive health programs have similarly found the private sector to be a necessary, though oft-overlooked part, of these efforts (Waters, Hatt, Axelsson 2002, Uplekar, Pathania, Raviglione 2001, Rosen 2000).

This recognition is motivating increased efforts to engage the private sector, especially private health care providers, in developing-country health programs.

Although most experts agree that ignoring the private sector’s large part in the service delivery system is unwise, there is less agreement, and far less knowledge, about strategies for engaging the private sector—which strategies work and under what conditions.

So far, efforts to engage the private sector have often been poorly documented and almost never rigorously evaluated.

Nevertheless, it is critical that health policymakers and analysts glean whatever insights can be gained from these early developing-country experiences.

Where relevant, learning from the established mechanisms used in developed countries’ mixed-delivery health systems is also critical.

Many policymakers will confront a number of predictable challenges as they try to identify and implement strategies to mobilize private providers toward achieving important program or sectoral objectives in their own countries.

Numerous World Bank clients are among those policymakers struggling to integrate this new perspective on the private sector into health policy and practice in their countries.  Bank sector specialists are working to assist them in these efforts.

The analysis presented in the remainder of this article was developed to help these clients and staff by presenting in a “user-friendly” manner whatever practical information is available about methods of working with the private health sector that is relevant for developing countries.  This analysis which is presented in a Handbook entitled "Private Participation in Health Care" is intended to be a practitioner’s guide.

The Task

Countless topics and strategies could be covered in such a guide.

To define the scope and structure of the Handbook, we have divided policymakers’ tasks into three parts:

. assessing what is going on in the private health sector
. selecting a strategy to engage the private sector in contributing to the programs and objectives being considered
. identifying the appropriate set of instruments for doing so.

Assessment

Frequently, health sector analytical work focuses on the public sector.

When, as is commonly the case, the private sector plays a significant role in health care delivery, this narrow focus undermines the soundness of the analysis and the validity of conclusions and recommendations.

Chapter 2 of the Handbook, “Conducting a Private Health Sector Assessment,” presents guidelines for ascertaining the private sector’s current role in delivering health services and for identifying areas where private providers might increase or improve their contribution to government programs and objectives.

Thus, this “how-to” chapter is intended to complement traditional health (public) sector analysis with comparable evaluation of the private sector. Such analysis is necessarily the first step of any effort to work with the private health sector.

Although this assessment may lead to a decision to encourage the private sector to expand or take on new tasks in certain areas, the Handbook does not advocate private sector expansion, privatization, or even working with the private sector, for its own sake.

Instead, it proposes approaching the private sector from a strategic and pro-active perspective—looking for opportunities to utilize or enhance its contribution to social objectives.

Selecting a Strategy

The Handbook distinguishes clearly between overall strategies for working with the private sector and instruments for implementing these strategies.

Any instrument (e.g. contracting, franchising, training) can be used in multiple ways to pursue a range of objectives, and as part of specific strategies toward the private sector.

Contracting, for example, can be used to improve current providers’ quality of services or to attract new providers to generate growth of services.

Contracting is also a critical element of conversion, where publicly delivered services are transferred to private providers but continue to be publicly funded.

To differentiate among these distinct initiatives, we categorize efforts to work with private providers according to what they are seeking to do with respect to the private sector.

Are they seeking to harness or influence the private sector that already exists? Are they seeking to grow the private sector in a strategic way? Or, are they seeking to turn over or convert public services to private operation?

Harnessing. As noted, most developing countries already have a large private sector in health care, especially in delivery.

Hence, engaging or harnessing those providers is the first and most obvious strategy to consider for enhancing the private sector’s contribution to health policy objectives.

Such a strategy consists of taking steps to guide the behavior of identified providers, and takes advantage of the fact that the providers are already delivering services and serving populations critical to program or sector objectives.

This is a lower risk strategy than others, such as conversion, where public services arrangements are discontinued and handed over to new operators.

Growing. An assessment of the private sector may identify areas where increased private sector activities would further priority objectives such as increasing access to services in specific regions.

In such a situation, policymakers will want to take steps to encourage private providers to grow their activities in these areas.

Similar to “harnessing,” this strategy is relatively low risk, as it does not alter existing service delivery arrangements.

Conversion. In certain countries, an assessment of the private sector, combined with traditional analysis of the public (health) sector, will identify public activities that may be productively turned over to private hands.

In Central Europe, for example, the transition to social insurance funding arrangements motivated a number of countries to convert their salaried general practitioners to private (self-) employment.

In these instances, policymakers can use the same instruments to work with the private sector as under the previous strategies, but they will need to include additional steps to transfer the activities to private entities.

From the wide range of instruments for implementing these strategies, this Handbook focuses on two: contracting and regulation.

These two mechanisms are the most widely used in developing (and developed) countries, though often with disappointing results. Thus, they are of interest to a large portion of World Bank client governments.

Identifying Instruments

Policymakers must start by selecting their strategy: by deciding exactly what they want the private sector to do. They must then identify the right instruments to get them to do what they want.

As noted, most instruments can be used to implement any of the strategies, but contracting and regulation are the tools most often used in both developing and developed countries in all three cases.

Accordingly, the second half of the Handbook presents “how-to” chapters on these critical instruments.

In these “how-to” chapters, every effort is made to present available knowledge about these instruments and their use.

Since operational research is so scanty in the developing-country context, the insights presented must necessarily be tentative.

Since many Handbook users will be working in an information-poor environment, all chapters supplement presented material with key operational references and, wherever possible, internet links.

The framework presented in the Handbook is also used in the World Bank website on Public Policy and Private Participation in Health. 

Handbook users are encouraged to check this site for newly completed research or other resources.

Each chapter is intended to function as a stand-alone piece as well as an integral part of the Handbook. Thus, some repetition is unavoidable.

Before reading and using the “how-to” chapters, Handbook users are strongly urged to read the Introduction (Chapter 1).

This chapter sets the context for the Handbook and presents the framework underlying its approach to public policy toward the private health sector.

It also presents the strategic categories described above in more detail, as well as the full range of instruments commonly used in working with the private sector (such as training, franchising, information dissemination, integration into referral networks or vertical programs).

It is envisioned that subsequent work by the World Bank and its partners will develop additional tools for developing-country policymakers.

New “how-to” chapters will then be added to this Handbook, both on-line and through publication, to expand the knowledge base for choosing and using instruments to work with the private health sector.

In addition to stimulating new policy initiatives, the changed perspective on the private sector’s role in delivering health services has triggered a rapprochement within the health and development field. It has created a common ground for analysts and policymakers, who up to now have perceived themselves as members of opposing camps—the “private sector is perfect” camp versus the “private sector is malign” camp.

Most debates between these two camps in the 1980s and 1990s were grounded more in ideology than evidence, and centered on the advantages and disadvantages of privatization.

Members of both camps now realize that this debate holds little relevance for developing countries, especially the poorest countries. For it is in these countries that the State’s capacities are most limited and the private sector already provides most services.

Debates and, more important, policy research are now turning to a host of more pragmatic issues such as how and when different strategies work to integrate the private sector into health sector policy.

Mechanisms such as contracting, regulation, training, and franchising hold the promise of building on what is already there. But, to realize that promise is a huge challenge.

We hope the Handbook will help World Bank clients, partners and staff meet this challenge.

Contact details

April L. Harding

Visiting Fellow
Global Center for Development
1750 Massachusetts Ave., NW
Washington, DC
20036
United States of America

Office: 1 (202) 416-5618
Office: 1 (202) 416-0700
Cell: 1 (202) 247-1496
Fax: 1 (202) 416-0750
Email: aharding@cgdev.org
web: http://www.cgdev.org



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Review

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2006 A Vintage Year

This Review looks at the performance of the global economy and markets in 2006 and implications for the health sector.


The bulls stole Wall Street last year, driven by a splurge in deal-making.

The total value of the world's financial assets — including equities, private and government debt securities, and bank deposits — grew faster in 2006 than the historical average rate, climbing by 17 percent to reach $167 trillion according to McKinsey & Company.

Spurred largely by equities, this growth in financial assets also outpaced growth in global GDP. Meanwhile, cross-border capital flows climbed to a record $8.2 trillion.

Alternative investments - hedge funds, private-equity funds - now total 3 trillion according to J.P Morgan Securities. Corporate debt defaults in the US reached a record low of 1.2 billion.

In this environment where investors were riding "cash" rapids, many looked to the emerging markets which ended up increasing 230% from lows in 2003.

BRIC Became a Household Word

Goldman Sachs economists coined the term "BRIC" for leading developing market economies - Brazil, Russia, India, and China.

Research indicated that these four countries could become larger than the world’s six most developed countries in the next 40 years.

Despite criticism decrying this prediction as “crystal ball gazing”, the notion of BRIC has captured the international investment community's imagination. It provides an intriguing glimpse into a world no longer dominated by U.S., European, and Japanese interests, while altering the economic landscape for the next generation.

As is often the case, the health sector is already leading the way in this respect. India has one of the largest pharmaceutical industries in the world, exporting drugs to both developed and developing markets. Its call centers are used by in the health industry just as it is by other sectors of the economy.

Its largest private hospitals can give even top centers in the US a run for their money in terms of clinical outcomes. And with 350 million middle income people seeking a higher standard of care than can be provided through the publicly subsidized National Health Service, the private health insurance market is expanding rapidly.

Although the context is different, the story for China is similar. Its pharmaceutical production has expanded rapidly during the past decade. Being one of the last sources of cheap labor, China can undercut the price of manufacturing goods and consumables in most or the rest of the world. The share of the population who have private health insurance remains one of the lowest in the world. Yet, China has the largest private health insurance market in the word.

The Brazilian health care system continues to be turbulent. Although the SUS (Sistema Único de Saúde) should provide equitable healthcare to all Brazilian citizens, provisions under its charter outstrip the realities of fiscal space allocated to health. The private sector is a vibrant part of the service delivery system, it has a strong pharmaceutical manufacturing sector, and there are several successful private health insurance systems.

Russia belongs to this group but a closer look at its political and economic peculiarities call into question its membership with this exclusive group of "breakout industrializing countries.  Russia's growth is based on (and limited by) quite different factors than exist in Brazil, India, and China.

As a result, the Kremlin ends up loooking less interested in opening Russia's economy to market forces than in leveraging the country's enormous resource wealth to consolidate state control over Russia economy. This has led some to re cast the group as BIC (Brazil, India and China), leaving out the R for Russia.

Beyond BRIC Towards New Merging Markets

Although characterized by less “buzz” than the billion populated BRIC, a new group of countries have emerged as promising emerging markets. This includes Egypt, Mexico, Poland, South Africa, South Korea, and Turkey.

They may not have the buzz of billion-plus population markets, but their growth is impressive – growth opportunities in the health sector of these countries may offer investors superior value. These six leading non-BRICs are notable for their strong growth profiles, fast-track reform agendas, and investor-friendly climates.

Eastern Europe, from the Baltic to the Balkans, is likewise blossoming thanks to reforms put in place after the collapse of the Iron Curtain. Unlike the largely export-dependent BRICs, most of these countries are prospering chiefly on domestic demand from surging consumer spending.

They do not suffer from India's volatile equity market, mainland China's disclosure paranoia, Brazil's hostile political environment and Moscow's penchant for interfering with private business. And the stars of the past - the Asian Tigers - have not been able to reinvent themselves.

Stellar Performance

Egyptian stocks were up 14 fold since 2003. Stocks in Brazil, South Korea and Russia have become mainstream holding for emerging market mutual funds. New money reached US$22 billion

The new "frontier markets" became Bangladesh, Cote d'Ivoire, Jamaica, and other countries in Africa, Asia, Eastern Europe and Latin America. Vietnam is already pricy.

Such frontier markets appeal to investors in developed countries seeking undiscouvered stocks. Demand has also come from the new burgeoning economies of China and India for commodities and natural resources found in South America and Africa.

Who's Who in this Expanding lineup based on the S&P/IFC Frontier Index:

Country Returns in %

Namibia 126.2
Romania 87.2
Ukraine 76.7
Botswana 64.9
Bulgaria 62.2
Lebanon 56.2
Slovakia 51.7
Jamaica 48.7
Bangladesh 48.3
Estonia 39.0
Trin&Toba 34.8
Latvia 33.3
Croatia 32.5
Slovenia 32.4
Lithuania 15.5
Ecuador 14.2
Kenya 13.0
Vietnam 2.1
Mauritius -4.8
Tunesia -8.0

Such frontier investments are good if the stocks are cheap and overlooked. In the bigger emerging markets stocks have already been picked and prices have gone up.

Contact details

Alexander S. Preker

President/CEO
Health Investment & Financing
14 Wall Street, 20th Floor
New York, NY
10005
United States of America

Office: 1 (212) 348-1866
Cell: 1 (202) 667-8286
Fax: 1 (212) 348-2866
Email: apreker@healthinvestment.com
web: http://hifcorporation.com/bio/10



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Outlook

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What's in Store for 2007?

This Outlook discusses what may be in store for the health sector in emerging markets in the year 2007.


Do you dare to gaze into the crystal ball? Will 2007 be a good year for investments in the health sector?

Predicting the future is a tough business. After a spectacular year when markets went higher than ever, will there be more gains to be made next year?

Here is what some of the experts say.

Those who are bullish say 2006 was a great year. Optimists say stocks finished high. There are signs that the economy is resilient. Rates have been steady. And after a roller cost ride oil finished up only one cent higher than the year before.

Those who are bearish fret. Nervous investors worry about signs of a weakening economy. They point out that 2006 finished quietly. Overseas interest rates are rising. And the domestic housing market is slow.

So the story is mixed. Any fool can buy a company but the clever part is selling it at a profit.

That means buying low and selling high. But if the markets are already at a peak and the economy wakening what should you do?

The brave will invest in the laggards who did not succeed in 2006, but are ready to turn the corner in 2007. There may be big gains in those quarters.

The more cautious will adopt a defensive strategy. They will buy things that people need in both good and bad times.

This makes the health sector and staple consumer goods easy pickings for 2007.

Contact details

Alexander S. Preker

President/CEO
Health Investment & Financing
14 Wall Street, 20th Floor
New York, NY
10005
United States of America

Office: 1 (212) 348-1866
Cell: 1 (202) 667-8286
Fax: 1 (212) 348-2866
Email: apreker@healthinvestment.com
web: http://hifcorporation.com/bio/10



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We welcome your views on this Outlook.

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Comment on Blog



Profiles


Understanding investment opportunities in emerging markets requires a full understanding of three elements related to corporate governance:  the people who run the business; the private companies who produce goods and services; and the market environment in which trading takes place. change

 

Health Investment & Finance provides a profile of the leadership characteristics of some of the health industry's top CEOs and senior management, an analysis of some of the best performing companies and leading stock exchanges.

 

Leadership Forum

Companies are run by people. 

People at the top such as Dr. Prathap C Reddy, Chairman
Apollo Hospitals Group,
make a difference. 

 

More ... 

 


Company Profile

With over 7000 beds in 38 hospitals, the Apollo Hospital Group is a  powerhouse in Asia.

It is a leader in healthcare innovation and quality care.

More...

Feature Stock Exchange

Today there are nearly 200 Stock Exchanges accross the world.

The Bombay Stock Exchange in India and others like it serve a growing equity and debt market in developing countries.  

More ...










The New York Stock Exchange (NYSE) is a stock exchange based in New York City, New York. It is the largest stock exchange in the world by dollar value of its listed companies' securities.[1] As of October 2008, the combined capitalization of all domestic New York Stock Exchange listed companies was US$10.1 trillion.[2]

 

The NYSE is operated by NYSE Euronext, which was formed by the NYSE's 2007 merger with the fully-electronic stock exchange Euronext. The NYSE trading floor is located at 11 Wall Street and is composed of four rooms used for the facilitation of trading. A fifth trading room, located at 30 Broad Street, was closed in February 2007. The main building, located at 18 Broad Street, between the corners of Wall Street and Exchange Place, was designated a National Historic Landmark in 1978,[3] as was the 11 Wall Street building.[4][5][6]

History

 

The origin of the NYSE can be traced to May 17, 1792, when the Buttonwood Agreement was signed by 24 stock brokers outside of 68 Wall Street in New York under a buttonwood tree on Wall Street. On March 8, 1817, the organization drafted a constitution and renamed itself the "New York Stock & Exchange Board". Anthony Stockholm was elected the Exchange's first president. (For other presidents, see List of presidents of the New York Stock Exchange.)

 

The first central location of the Exchange was a room, rented in 1817 for $200 a month, located at 40 Wall Street. After that location was destroyed in the Great Fire of New York (1835), the Exchange moved to a temporary headquarters. In 1863, the New York Stock & Exchange Board changed to it's current name, the New York Stock Exchange. In 1865, the Exchange moved to 10-12 Broad Street.

 

The volume of stocks traded increased six-fold in the years between 1896 and 1901, and a larger space was required to conduct business in the expanding marketplace.[8] Eight New York City architects were invited to participate in a design competition for a new building; ultimately, the Exchange selected the neoclassic design submitted by architect George B. Post. Demolition of the Exchange building at 10 Broad Street, and adjacent buildings, started on May 10, 1901.

 

The new building, located at 18 Broad Street, cost $4 million and opened on April 22, 1903. The trading floor, at 109 x 140 feet (33 x 42.5 m), was one of the largest volumes of space in the city at the time, and had a skylight set into a 72-foot (22 m)-high ceiling. The main façade of the building features six tall Corinthian capitals, topped by a marble sculpture by John Quincy Adams Ward, called “Integrity Protecting the Works of Man”. The building was listed as a National Historic Landmark and added to the National Register of Historic Places on June 2, 1978.[9]

 

In 1922, a building for offices, designed by Trowbridge & Livingston, was added at 11 Broad Street, as well as a new trading floor called "the garage". Additional trading floor space was added in 1969 and 1988 (the "blue room") with the latest technology for information display and communication. Yet another trading floor was opened at 30 Broad Street in 2000. As the NYSE introduced its hybrid market, a greater proportion of trading came to be executed electronically, and due to the resulting reduction in demand for trading floor space, the NYSE decided to close the 30 Broad Street trading room in early 2006. As the adoption of electronic trading continued to reduce the number of traders and employees on the floor, in late 2007, the NYSE closed the rooms created by the 1969 and 1988 expansions.

 

The Stock Exchange Luncheon Club was situated on the seventh floor from 1898 until its closure in 2006. [10]

 

Events

 

See also: Black Monday (1987) and October 27, 1997 mini-crash

 

The exchange was closed shortly after the beginning of World War I (July 31, 1914), but it partially re-opened on November 28 of that year in order to help the war effort by trading bonds, and completely reopened for stock trading in mid-December.

 

On September 16, 1920, a bomb exploded on Wall Street outside the NYSE building, killing 33 people and injuring more than 400. The perpetrators were never found. The NYSE building and some buildings nearby, such as the JP Morgan building, still have marks on their facades caused by the bombing.

 

The Black Thursday crash of the Exchange on October 24, 1929, and the sell-off panic which started on Black Tuesday, October 29, are often blamed for precipitating the Great Depression of 1929. In an effort to try to restore investor confidence, the Exchange unveiled a fifteen-point program aimed to upgrade protection for the investing public on October 31, 1938.

 

On October 1, 1934, the exchange was registered as a national securities exchange with the U.S. Securities and Exchange Commission, with a president and a thirty-three member board. On February 18, 1971 the non-profit corporation was formed, and the number of board members was reduced to twenty-five.

 

One of Abbie Hoffman's well-known protests took place on August 24, 1967, when he led members of the Yippie movement to the gallery of the New York Stock Exchange (NYSE). The protesters threw fistfuls of dollars (most of the bills were fake) down to the traders below, some of whom booed, while others began to scramble frantically to grab the money as fast as they could. Hoffman claimed to be pointing out that, metaphorically, that's what NYSE traders "were already doing." "We didn't call the press," wrote Hoffman, "at that time we really had no notion of anything called a media event." The press was quick to respond and by evening the event was reported around the world. Since that incident, the stock exchange has spent $20,000 to enclose the gallery with bulletproof glass.

 

On October 19, 1987, the Dow Jones Industrial Average (DJIA) dropped 508 points, a 22.6% loss in a single day, the second-biggest one-day drop the exchange had experienced, prompting officials at the exchange to invoke for the first time the "circuit breaker" rule to halt all trading. This was a very controversial move and led to a quick change in the rule; trading now halts for an hour, two hours, or the rest of the day when the DJIA drops 10, 20, or 30 percent, respectively. In the afternoon, the 10% and 20% drops will halt trading for a shorter period of time, but a 30% drop will always close the exchange for the day. The rationale behind the trading halt was to give investors a chance to cool off and reevaluate their positions. Black Monday was followed by Terrible Tuesday, a day in which the Exchange's systems did not perform well and some people had difficulty completing their trades.

 

There was a panic similar to many with a fall of 7.2% in value (554.26 points) on October 27, 1997 prompted by falls in Asian markets, from which the NYSE recovered quickly.

 

On January 26, 2000, an altercation during filming of the music video for Sleep Now in the Fire, which was directed by Michael Moore, caused the doors of the exchange to be closed and the band, Rage Against the Machine, to be escorted from the site by security,[11] after band members attempted to gain entry into the exchange.[12] Trading on the exchange floor, however, continued uninterrupted.[13]

 

 

Security after the September 11 attacks

 

 

The NYSE was closed from September 11 until September 17, 2001 as a result of the September 11 attacks.

 

On September 17, 2003, NYSE chairman and chief executive Richard Grasso stepped down as a result of controversy concerning the size of his deferred compensation package. He was replaced as CEO by John S. Reed, the former Chairman of Citigroup.

 

The NYSE announced its plans to acquire Archipelago on April 21, 2005, in a deal intended to reorganize the NYSE as a publicly traded company. NYSE's governing board voted to acquire rival Archipelago on December 6, 2005, and become a for-profit, public company. It began trading under the name NYSE Group on March 8, 2006. A little over one year later, on April 4, 2007, the NYSE Group completed its merger with Euronext, the European combined stock market, thus forming the NYSE Euronext, the first transatlantic stock exchange.

 

Presently, Marsh Carter is Chairman of the New York Stock Exchange, having succeeded John S. Reed and the CEO is Duncan Niederauer, having succeeded John Thain.

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  January 01, 2007  


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