The recently announced 2019 Malaysian Budget proposed an increase in public healthcare expenditure, with the government pushing forward with fundamental healthcare initiatives.
In a report by Fitch Solutions, government investment will support the future growth of the pharmaceutical and healthcare industry in Malaysia.
In 2017, the country’s healthcare market amounted to 56.3 billion ringgit (US$13.1 billion) and this is expected to rise to 127.9 billion ringgit by 2027, said Fitch Solutions.
The 2019 Budget theme was “Credible Malaysia, Dynamic Economy, and Prosperous Rakyat” and focused on three main thrusts to recapture Malaysia's status as an economic powerhouse: Institutional reforms, people's well-being, and the promotion of entrepreneurial culture.
The social sector, the second largest development expenditure recipient, will receive 15.2 billion ringgit. For this sector, the access to basic services, predominantly education and healthcare will be expanded further in efforts to bridge the urban-rural development gap.
A sum of 29 billion ringgit will be allocated toward the healthcare sub-sector, representing an increase of 7.8 per cent compared to the 2018 budget. This makes up almost 10 per cent of the overall budget.
Some 2.3 billion ringgit will be allocated to the health sub-sector mainly for building and maintaining hospitals and health clinics, upgrading the existing healthcare facilities and procurement of medical equipment, in line with the emphasis to provide quality healthcare and increase accessibility to health services.
With greater access to healthcare services and guarantees of greater public funds towards healthcare, medicine sales are highly likely to experience a tailwind, said the report.
However, analysts said that innovative drugmakers will continue to struggle due to the country's challenging regulatory environment.
Malaysia’s public debt as a share of gross domestic product is likely to remain high over the coming years, said the report. Elevated debt will also reduce Malaysia’s ability to respond to negative shocks to the economy, especially from external events, it added.