Abbvie's latest investment into Singapore highlights the country's strength as a biotechnology hub for multinational pharmaceutical firms. In addition to the country's expertise, the ageing population coupled with the government's promise to improve healthcare affordability are other growth opportunities for pharmaceutical firms. However, its long-term growth potential will continue to be limited by its small population.
Headline Expenditure Projections
- Pharmaceuticals: SGD990mn (US$790mn) in 2013 to SGD1.04bn (US$840mn) in 2014; +5.5% in local currency terms and +6.3% in US dollar terms.
- Healthcare: SGD17.77bn (US$14.20bn) in 2013 to SGD19.66bn (US$15.83bn) in 2014; +10.6% in local currency terms and +11.5% in US dollar terms.
Singapore's Pharmaceutical Risk/Reward Rating (RRR) score for Q214 is 60.9 out of the maximum 100 under our newly improved RRR system. The country scored above average for the majority of indicators and sub-indicators, including sector value growth, pensionable population and overall economic and political landscape. With the relatively high score, the country is ranked sixth out of the 19 key markets in the region, behind developed countries like Japan, South Korea and Australia, as well as emerging markets like China and Taiwan. In the South East Asia region, it continues to rank first due to its relatively higher score under country and industry risks.
Key Trends And Developments
- In February 2013, AbbVie reported an approximately SGD400mn (US$320mn) investment to establish operations in Singapore for small molecule and biologics active drug substance manufacturing. The completed facility will provide manufacturing capacity for emerging compounds within AbbVie's oncology and immunology pipeline to serve markets globally. The investment will establish the first manufacturing presence in Asia by AbbVie.
- In January 2014, Singapore Health Minister Gan Kim Yong announced some key measures to address the problem of bed shortages in hospitals. The measures proposed by the minister include the timely discharge of patients, the addition of more than 300 beds, and working with private hospitals to deliver 50 more beds. Community hospitals and nursing homes will see about 1,200 new beds being added in 2014 and another 10,000 by 2020, during which six new hospitals are expected to open, Yong said. The ministry is exploring additional cooperation with private hospitals such as establishing their emergency departments to treat more patients. The ministry also plans to set up more eldercare facilities comprising 12 new and replacement nursing homes by 2016.
In December 2013, Japanese pharmaceutical company Santen Pharmaceuticals announced the establishment of a fully owned subsidiary in Singapore, reports GlobalPost. The subsidiary will be known as Santen Pharmaceutical Asia and help the company to expand its operations in South East Asia. The main objective of Santen Pharmaceutical is to quickly secure regulatory approval for product sales in the region by capitalising on Singapore's geographical advantage and to manufacture products to address local medical needs.
BMI Economic View: Singapore remains one of the most fiscally sound sovereigns in the developed world, with huge financial reserves and a perennially balanced budget providing a rock solid foundation. Despite the fact that the government will continue to pursue spending initiatives aimed at restructuring the economy, as well as addressing the country's challenging demographic issues, we do not believe that it will resort to deficit budgets in order to achieve these objectives. As a result, we see the government running a slight fiscal surplus, averaging 1.0% of GDP per annum, over the coming decade.
BMI Political View: While far from constituting a national minimum wage, the Singapore government's latest initiative to set a wage floor in the cleaning industry is nevertheless a significant development. In line with our expectations for the ruling People's Action Party (PAP) to introduce increasingly populist policies in order to shore up support among the electorate, we believe that such measures reflect the ongoing maturation of Singapore's democratic process, which will have notable implications for the city state's business environment.