Pre-Budget 2019 Perspectives - Healthcare & Life Sciences
Smart nations can live well only with smart healthcare. As ageing continues at an unprecedented pace especially in countries with declining fertility rates, healthcare in developed countries (e.g. the United Kingdom, Ireland and Hong Kong) is steadily moving towards a “patient-centric”, data-sharing approach.
Such a model can drive higher efficiency, with a key component being the ability to personalise care and therapy to be more predictive and preventive. This improved ability will also help reduce healthcare spend on treatment and medication, thereby freeing up funds for other causes.
Singapore can be a world leader in smart healthcare, with its conducive ecosystem that has significant strengths: a diverse population base for genetic profiling, an advanced system with electronic databases, strong academia and research, top pharmaceutical and medical technology companies, and increased adoption of wearables and smart devices.
Where Singapore can further enhance its healthcare data set, the clear benefits include:
- Improved population health, with more precise care routing and therapy.
- Having a stronger voice in research areas like diabetes and oncology.
- Developing more effective healthcare programmes for an ageing population.
- Enabling more of a value-based payment structure for care provision, drugs and/or devices.
- Being ready to adopt more automation and new technologies like AI.
- Attracting more healthcare-related R&D to be carried out in Singapore.
The data is already there; it is just fragmented across various players and platforms. What is missing is more effective and secure healthcare data-sharing, and increased collaboration. Yet, healthcare in Singapore has not been able to capitalise on this opportunity to take the sector forward.
Taking healthcare to the next level will require decisive executive action. Various sector players must be compelled to share and synchronise their data, while incentives need to be put in place to drive sustained innovation.
1. Establish a government-controlled, secure healthcare data lake.
Based on our previous engagements with the healthcare sector, the task of accelerating information consolidation from multiple parties (hospitals, clinics, pharmaceutical and diagnostics companies, as well as participating individuals) will require a single driving authority. The government should take the lead to set up a common platform and develop applications to facilitate synchronisation of healthcare data by linking patient outcomes with clinical research and real-world insights. Such a platform could be automated and sit on advanced technologies like the cloud or a blockchain.
2. Adopt a risk-reward framework for healthcare providers and life sciences companies to participate in data sharing.
- A concessionary tax rate of 5% for income earned by healthcare providers, pharmaceutical and device companies participating in sharing anonymised data.
- Requiring pharmaceutical companies receiving such data to develop innovative therapies for the Singapore population. Singapore can then address its unmet healthcare needs, while also serving as a launch pad to commercialise such therapies for the world.
3. Liberalise enhanced R&D tax deductions to attract and retain R&D activity in Singapore.
Currently, the 250% R&D tax deduction is only available for R&D performed in Singapore, and where the taxpayer is the beneficiary of the R&D activities (i.e. effective ownership of intellectual property is in Singapore, and the R&D is not funded by another entity within the group or elsewhere).
- To anchor R&D activities in Singapore, tax deductions of 150% of R&D costs should be granted as long as the R&D is done in Singapore for a multinational group’s associated foreign entities. This should apply even when the R&D costs are funded by an overseas affiliated entity. This proposed lower tier R&D deduction (150% compared with the current 250% deduction) recognises that there is lower risk involved in “funded” projects, while still anchoring R&D activities in Singapore even after the expiry of R&D grant funding from government agencies such as the Singapore Economic Development Board (which is typically given only for two to three years).
- Allow overseas R&D expenditures to be eligible for 250% tax deductions, with the condition that these overseas R&D activities are linked to local R&D activities. Some R&D activities have to be done overseas, e.g. clinical trials, as the size and type of population in Singapore is limited.
- Remove the “commencement of business” requirement to claim R&D expenditure for base and enhanced tax deductions, as this is an obstacle for new subsidiaries or startups which may derive income only many years down the road, if at all.