ALL in all, MIDF Research (MIDF) maintains their optimism in the healthcare sector, despite the anticipated changes and updates to existing policies and programmes for the private sector.
“The US’s withdrawal from WHO is expected to place China as the next major funder to the organization, opening opportunities for our regional and local healthcare players to leverage on pharmaceuticals and medical device trades, advanced research and development, and Chinese medical tourists,” he said.
The prevalence of Human metapneumovirus (HPMV), while still below 1% in Malaysia, signals the need for more development of vaccines in preparation of any future endemics.
Malaysia’s call for a reduced dependency on vaccine imports whilst developing and manufacturing local vaccines is timely, and the HPMV could be the right catalyst to further improve the pharmaceutical sector.
The government is expected to continue seeking a sustainable system for both patients and providers, by improving three key drivers: sustainable medical workforce, affordable and comprehensive payment system for patients, and long-term positive cost management.
“While we remain vigilant on Diagnostic Related Group and the Hospital Services Outsourcing Programme implementation on a larger scale, we are confident that the balance between public and private sectors can be reached given the right timeline, framework and coverage,” said MIDF.
Pharmaceuticals is expected to remain sanguine under OTP 2.0 programme, although higher competition may impact its financial performance in the midterm, in tandem with the need to reduce prices and dependency on one supplier, particularly for niche drugs.
Private hospitals are expected to remain resilient on the back of surging inpatient visits and in-house treatments from both domestic patients and medical tourists.
The increased demand for inpatient treatments is anticipated to persist in the near term, fuelled by the continuous affordability of healthcare services and the safety of the country for foreigners and locals alike.
“Our TOP PICK is KPJ Healthcare. We maintain a buy call for KPJ with a revised target price of RM2.75,” said MIDF.
The group had shown consistent revenue growth, with a significant surge in net income. Additionally, KPJ boasted the largest network of private hospitals in Malaysia (over 29 hospitals), with the opportunity to expand its bed capacity and services (approximately 5,000 beds by Calendar Year 2028).
The latter also minimises the impact of fluctuation in forex as compared to its peers. The group is also capitalising on the growing health tourism market, and the implementation of a new Hospital Information System.
“We believe KPJ has a sustainable presence within the healthcare sector, given its strong foundation as a healthcare service provider and its lesser susceptibility to economic downturns,” said MIDF. —Feb 10, 2025
Main image: OECD
