Singapore Pharmaceuticals and Healthcare Report Q3 2012

BMI View: The reduction in healthcare subsidies for permanent residents (PRs) in Singapore, which is to be implemented in two phases over the coming 12 months, is a politically driven move rather than a genuine restructuring of the public healthcare system. The policy also fails to address current healthcare concerns, which include rising costs, long hospital waiting times and a lack of beds. For the time being, we hold to our market forecasts, on the basis of continuing need for treatment and the fact that PRs accounted for only 5% of the 13,000 subsidised patients in hospitals and 5% of the 144,000 subsidised patients in specialist clinics in 2011. We have, however, revised up our forecast for Singapore’s healthcare spending, following the receipt of the most recent market information and reappraisal of historical data.
Headline Expenditure Projections 􀂃 Pharmaceuticals: SGD901mn (US$716mn) in 2011 to SGD951mn (US$755mn) in 2012; +5.6% in local currency terms and +5.4% in US dollar terms. US forecast significantly higher from Q212 on account of exchange rate factors.
􀂃 Healthcare: SGD13.16bn (US$10.47bn) in 2011 to SGD14.61bn (US$11.59bn) in 2012; +11.0% in local currency terms and +10.8% in US dollar terms. Forecast significantly higher from Q212 on account of new historical data.
􀂃 Medical devices: SGD449mn (US$357mn) in 2011 to SGD467mn (US$371mn) in 2012; +4.0% in local currency terms and +3.8% in US dollar terms. Forecast broadly unchanged from Q212.
Risk/Reward Ratings: Singapore’s score for Q312 stands at 61.9 out of a 100, which is 2.4% lower on a quarter-on-quarter (q-o-q) basis. The country also slipped to fifth out of 18 markets surveyed in the region, again placing it below China. Singapore’s composite score was dragged down by a deterioration of its industry reward component, although its risks are viewed as the most benign in the region. Globally, Singapore is placed 16th out of 95 countries, although we expect its position to worsen over the coming years; this will be on account of factors such as its pharmaceutical market maturity and increased competition from emerging and more populous regional markets such as Vietnam.
Key Trends And Developments 􀂃 In March 2012, the Singaporean Health Sciences Authority (HSA) was poised to assess the data that led to the addition of new safety labels on cholesterol-decreasing statin medicines by the US Food and Drug Administration (FDA) . The FDA enforces compulsory safety labels, which include warnings about rare risks such as memory loss and confusion, on statin products. The drugs are available in six types under 34 brands in Singapore.
􀂃 In January 2012, the Singaporean government was considering allowing the private sector to access the Medication Assistance Fund (MAF), which supports eligible patients to pay for expensive drugs that are not included in the Standard Drug List. According to Minister for Health Gan Kim Yong the government must be cautious when considering the expansion of the MAF to include medications prescribed by non-hospital clinics, such as private clinics and GPs, as some non-standard/non-generic medications may become expensive as the pharmaceutical industry evolves.
􀂃 Singapore’s authorities remain committed to the improvement of cancer detection. To this end, in April 2012, the National Healthcare Group Diagnostics (NHGD) partnered with the Singapore Cancer Society (SCS) to provide subsidised mammogram and Pap smear screening to women. The scheme is the second NHGD/SCS joint effort in this regard.
BMI Economic View: Singapore allayed fears of a sharp slowdown in Q112, posting above-consensus 9.9% q-o-q growth on strong exports of manufactured goods. In view of the slightly better-than-expected growth figures and stubborn inflation, the Monetary Authority of Singapore (MAS) tightened monetary policy by slightly raising the Singapore dollar’s appreciatory slope, presaging continued strength in the currency. Still, we point out that year-on-year (y-o-y) growth was considerably more muted, at 1.6%, underscoring our view that the economy will most likely grow only modestly at a rate of 2.6% in 2012 as global headwinds, including a China hard landing and ongoing eurozone woes, weigh on the city-state’s trade outlook. In fact, overall exports amount to more than twice the island’s total GDP, meaning that even small swings in trade can have a significant effect on GDP numbers. Singapore’s manufacturing sector is similarly volatile.
BMI Political View: Participants in a recent political forum widely agreed that the ruling People’s Action Party (PAP) has taken a more consultative approach to governing since it received its lowest share of the vote in the country’s history in the 2011 general election. However, opposition members maintain that, although some changes have been seen, they have not been enough. The PAP has maintained a parliamentary majority since the city-state’s independence in 1965, but opposition parties have gained considerable momentum in recent years as hot-button issues such as immigration and economic policy have led to greater debate among the electorate.