MCO to hit private healthcare firms

MCO will prevent both inpatients and outpatients coming to the establishments to seek treatments and to undergo procedures


PRIVATE healthcare companies are expected to take hits from the lesser number of patients and non-life-threatening treatments sought at hospitals following the reimplementation of the Movement Control Order (MCO).

Bursa Malaysia’s healthcare index was the only index in the red territory yesterday, falling by 0.11% or 4.16 points to 3,663.58 with 105.77 million units traded. Gainers led losers seven to six, with component stocks like KPJ Healthcare Bhd, TMC Life Sciences Bhd and Pharmaniaga Bhd listed among the top gainers, while laggards included Adventa Bhd, Supermax Corp Bhd and IHH Healthcare Bhd.

MIDF Amanah Investment Bank Bhd, in a note yesterday, stated that the tighter movement restrictions over the next two weeks will limit access to private healthcare services, which will consequently eat into earnings.

“Within the healthcare sector, we opine that the private healthcare providers and pharmaceutical manufacturers are expected to be impacted by the implementation of the second MCO in the five states and the Federal Territories, as previously seen during the first MCO implemented back in March last year.

“The MCO will prevent both inpatients and outpatients coming to the establishments to seek treatments and to undergo procedures,” the report read.

It added that non-life-threatening procedures at medical facilities are expected to be postponed with tighter movement restrictions, which will indirectly drag down private healthcare providers’ revenue stream.

“The administrative costs of these private healthcare providers will continue to be incurred despite the reduction in the number of inpatients and outpatients, as well as the revenue per patient for the hospitals.

“It will remain a challenge for the private healthcare service providers as they try to minimise the impact from the MCO,” MIDF stated.

It noted that demand for pharmaceutical products is also expected to decline, affecting the orders and sales revenue of the drug makers in the next two weeks.

“Despite being classified as an essential service and the approval for manufacturers to continue operation throughout the period, the sales and marketing arm of these manufacturers is expected to be hit by MCO as reduced accessibility to private healthcare providers, general practitioners and pharmacies is anticipated given the restrictions,” it said.

The MCO is expected to deliver a double-whammy impact on the local pharmaceutical manufacturers should it be prolonged, it stated, adding that sales of non-immunity boosting products have seen a decline in recent months.

Aberdeen Standard Islamic Investments (M) Sdn Bhd country head Gerald Ambrose, however, opined that the healthcare counters could be lifted by the health equipment providers as the demand for personal protective equipment (PPE) and other protective clothing is drastically rising due to the resurgence of coronavirus cases.

“We could have another rally in the healthcare sector like surgical gloves, as prices are still rising and demand has not peaked,” he said.

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