Malaysia's healthcare and pharmaceuticals market is posting strong growth, and the government's budget allocation for the health sector for 2014 confirms our optimistic view of the sector. The government plans to expand and upgrade its hospital network, increase the number of clinics and -controversially - abolish the sugar subsidy. This final move has been met with criticism, but is an importantstep towards dealing with rising levels of obesity and diabetes in the country. Malaysia's private sector is also posting robust growth, with foreign investment in private hospitals and healthcare centres catering to the growing medical tourism market. Challenges include the changing burden of diseases - as Malaysia's middle class expands - and having sufficient numbers of healthcare personnel to staff new hospitals and clinics. Headline Expenditure Projections
- Pharmaceuticals: MYR6.06bn (US$1.96bn) in 2012 to MYR6.66bn (US$2.18bn) in 2013; +10.0% in local currency and +11.2% in US dollars. Forecast increased in light of new budgetary data for 2014.
- Healthcare: MYR34.66bn (US$11.22bn) in 2012 to MYR38.14bn (US$12.49bn) in 2013; +10.0% in local currency and +11.3% in US dollars. Forecast raised from Q413 due to the release of the 2014 budget.
Risk/Reward Rating: In Q114, Malaysia's Pharmaceutical Risk/Reward Rating (RRR) stood at 60. It posts above-average scores for every indicator in the Asia Pacific region, and ranks eighth out of 19 markets.
Key Trends And Developments
- In November 2013, Malaysia's government announced its 2014 budget. Healthcare spending will total MYR264.2bn (US$195bn), or 8.4% of the total budget. This marks a 14.5% increase on 2013.
- Private healthcare providers continue to bolster their presence in Malaysia, with BP Healthcare group announcing in September 2013 that it plans to expand its referral programme, while in October 2013 Ramsay Sime Darby Health Care announced plans to expand its hospital network in the country.
- As negotiations on the Trans-Pacific Partnership Agreement continue, Malaysia's Prime Minister said in October 2013 that he would order two more cost-benefit studies on the benefits that the TPPA would bring to small firms and Malaysia's national interest before opening the matter up to further debate. Issues such as intellectual property rights - which affect the pharmaceuticals industry - are key sticking points.
BMI Economic View: Malaysia rose two places in the World Bank's 2014 Doing Business Report, rising from eighth to sixth place globally, out of the 189 countries reviewed. This figure illustrates the ongoing improvements in the business environment and we expect foreign direct investment (FDI) to continue strongly in the short term.
BMI Political View: Partly elections in October 2013 generated a clear victory for Prime Minister Najib Razak's political allies. As such, we believe this marks the start of a period of political continuity. Another issue that is highly political is negotiation over the Trans-Pacific Partnership Agreement. Observers now doubt that a deal will be signed in Malaysia before the end of 2013.