The new regulations are expected to be implemented when consultations with the pharmaceutical industry are concluded
By MARK RAO / Pic By TMR
IHH Healthcare Bhd is working with the association of private hospitals and relevant authorities to facilitate the adoption of impending drug price controls in Malaysia.
This is in view of the government’s plan to gazette laws under the Price Control and Anti-Profiteering Act 2011 to regulate medicine and pharmaceutical prices amid increasing private healthcare costs in the country.
The plan is expected to have a huge impact on IHH due to its position as one of Malaysia’s leading private healthcare groups.
“With regard to impending measures, we are working very closely with both the Association of Private Hospitals of Malaysia, as well as engaging with relevant authorities to see how we can help transition this more seamlessly,” IHH MD and CEO Dr Tan See Leng told reporters after the company’s AGM in Kuala Lumpur yesterday.
The Health Ministry (MoH) is working with the Ministry of Domestic Trade and Consumer Affairs as price controls fall under the purview of the latter.
The new regulations are expected to be implemented when consultations with the pharmaceutical industry are concluded.
Dr Tan said the company is “acutely aware” of the MoH’s initiatives to manage rising healthcare costs in Malaysia resulting from the prevalence of non-communicable diseases and multiple complexities facing patients today.
“In terms of healthcare costs, we can only manage the gradient of the increase, but we cannot put a cap and say ‘no increase’,” he said.
Nonetheless, Dr Tan said leveraging on spare capacities and competencies between both the public and private healthcare sectors will be key in mitigating some of the impending price controls.
“For us, the key thing is to try to reach out to as broad as the population base as possible, and cater to them as much as we can,” he added.
IHH is among the largest healthcare providers in Asia with 83 hospitals under its belt across 12 countries. Its listed assets are worth over US$10 billion (RM41.9 billion) in market
The private healthcare group achieved a compound annual growth rate of 10% for both revenue and earnings before interest, taxes, depreciation and amortisation since its 2012 listing.
For its fiscal year ended Dec 31, 2018, turnover grew 3.4% year-on-year to RM11.52 billion on growth from existing operations and new hospitals in Hong Kong and Turkey.
However, net profit for the year sunk 35.3% to RM627.69 million over the same period as the weakening Turkish lira negatively impacted the group’s non-lira loan borrowings.
As such, IHH had completed a US$250 million capitalisation exercise to bring down the debt of its Turkish operations from 670 million in US and euro equivalents to approximately 420 million today.
Its CFO Low Soon Teck said the company is looking to refinance another 250 million in US and Euro equivalents from the remaining non-Turkish debt by swapping half or more of the amount into Turkish lira to reduce its foreign-exchange exposure.
Meanwhile, IHH’s open offer to increase its stake in Fortis Healthcare Ltd of up to 57% remains on hold pending the Supreme Court of India’s decision on Daiichi Sankyo Co Ltd’s legal action against Fortis’ former promoters, Malvinder Singh and Shivinder Singh. The decision is expected to be made by the third quarter of this year.
IHH acquired a controlling 31.1% share in Fortis when its RM2.35 billion bid was chosen ahead of three other companies.
Low clarified that the court’s decision will not result in any impairment incurred by the company as neither IHH, nor Fortis are parties to the ongoing court action.
“I want to state categorically — the Supreme Court order does not impact Fortis. So, there is no impairment as a result of this Supreme Court order,” he said.
On a separate note, Dr Tan — who has been with the company since its inception — is stepping down when his contract expires at the end of this year. He will be replaced by Columbia Asia Group CEO and former colleague Dr Kelvin Loh Chi-Keon.
Dr Tan was previously reported to be the highest paid CEO for a government-linked company last year. IHH’s annual report revealed that he earned RM36.17 million in remuneration last year, including RM31.35 million in bonuses and incentives on top of a RM4.6 million salary.
IHH chairman Datuk Mohammed Azlan Hashim said the company’s recruitment strategy is to secure the best talent available, while its remuneration will be performance-driven.
“In terms of our remuneration policy, we have always attempted as far as possible to be market competitive and we will always have a performance basis of assessment for the compensation,” he said.