Two ways for Singapore to stay ahead of the competition as Asia's healthcare sector booms

The region is poised for a 3- year CAGR of 12.8%.

The healthcare sector in Asia Pacific is estimated to grow at a 3-year CAGR of 12.8%, and in order for Singapore to get a bigger slice of the market, an industry expert suggests it should keep its focus on ensuring high standards of medical practices and supplies and continuous improvement in medical research.

In collaboration with SGX, DBS Vickers Securities hosted Healthcare Corporate Day on 23 September 2016 with nine corporates from the healthcare sector listed on SGX.

A keynote speaker during the event was Dr Loo Choon Yong, Executive Chairman and Co-Founder of Raffles Medical Group. Dr Loo continues to see opportunities in the healthcare sector in Asia Pacific, and estimated a 3-year CAGR of 12.8% in healthcare revenue. The growth in healthcare spending, he said, is largely driven by a few key factors including ageing, increase in chronic illnesses, urbanisation and growing affluence in Asia. Urbanisation and growing affluence could also drive the growth of private healthcare spending.

Among the countries in Asia, Dr Loo sees opportunities in China, Indonesia and Myanmar where the healthcare sector is still under-developed / developing.

Based on WHO 2012 figures, the healthcare expenditure per capita in these countries ranges from US$20 to US$322; as a comparison, 0.9% to 14% of Singapore’s healthcare expenditure per capita of US$2,287. This is small relative to the population of those countries – ranging from 50m to 1.4bn – compared to Singapore’s 6m population.

Dr Loo noted that apart from offering advanced medical technology, Singapore could potentially introduce high standards of healthcare practices and efficient healthcare systems upon the entry of Singapore healthcare providers into these countries.

While Singapore has developed itself into an internationally recognised medical hub especially within the Asia Pacific region, its neighbouring countries, such as Japan, South Korea, Thailand and Malaysia, have improved their respective medical services vastly over the years, thus, raising the competition within the region.

However, Dr Loo believes that Singapore has the capacity to stay ahead of competition mainly from keeping high standards of healthcare practices and ensuring medical supplies, such as blood is clean and free from diseases is crucial in giving assurance to foreign patients, and continuous improvement in medical research to differentiate themselves and be one step ahead of their competitors.

According to DBS Vickers Securities, Singapore’s healthcare sector is broadly going through two stages. First, large healthcare corporate with stable / mature operations in their home market are looking to expand overseas. Secondly, healthcare service providers are corporatizing their practices into chain of medical practices to leverage on size and growth.

On the investment side, the research firm noted that while most were familiar with the large-cap hospital players (IHH and Raffles), there was strong interest in the smaller-cap healthcare service providers (largely specialtyclinic groups) partially led by the potential IPO of Fullerton.