In the pink of health


WE REMAIN positive on Malaysia’s healthcare sector in the medium term, supported by the increasing trend of the ageing population, growth in medical tourism and the overall increase in demand for medical services. 

While the introduction of the Health White Paper (HWP) which entails potential collaborations through public-private partnerships would ease the ove crowding situation in the public sector, we foresee challenges during the implementation phase. Nevertheless, we believe this is not likely to affect the private sector in the near term. 

Hence, we remain ‘Overweight’ on the healthcare sector and reiterate outperform calls on both KPJ Healthcare Bhd and IHH Healthcare Bhd because of a rising number of inpatient volumes and bed occupancy rate, while maintaining ‘Neutral’ on Apex Healthcare Bhd in cautious on slowing demand for its core respiratory illness products. 

Growth Drivers Moving Forward

We believe the medium-term prospect of the Malaysian healthcare sector will remain intact, supported by increasing demand for medical services due to our ageing population. Also, the granting of up to 30-day visa-free entry to Chinese and Indian citizens should bode well for the Flagship Medical Tourism Hospital Programme. 

Moreover, the rising obesity rate among children and adolescents would lead to a greater demand for healthcare services, including pharmacotherapy, bariatric surgery, preventive care, diagnostics and other treatment options. 

Implementation of HWP 

We are positive about the integration of the HWP into the Malaysian dual-healthcare system, which would help to ease the prolonged overcrowding situation in the public sector through strategic collaborations. 

However, we believe the HWP would face challenges including the proposed value-based model’s framework with potential difficulties in standardising metrics for measuring patient outcomes. 

Moreover, the development of a dedicated health fund is still in the conceptual stages and remains unclear. We anticipate a rise in overall healthcare costs due to the increased workforce required for scrutinising and processing claims from various hospitals. 

Malaysia’s healthcare sector would also be at risk of distorting free-market practices with the proposed implementation of transparency in medicine pricing. 

KPJ is Our Top Pick 

Moving to the first half of 2024, an increasing number of inpatients and outpatients is anticipated, leading to a higher bed occupancy rate. Our top pick is KPJ, hinging 

on growing inpatient volume and bed occupancy rate. We continue to like its efforts in identifying and optimising underperforming assets, coupled with improvements in routine business operations and processes. 

Additionally, KPJ also aims to enhance a culture of cross-referrals within its facilities to ensure patients receive optimal experiences and clinical outcomes. 

  • The views expressed are of the research team and do not necessarily reflect the stand of the newspaper’s editorial board. 

  • This article first appeared in The Malaysian Reserve weekly print edition