PETALING JAYA: The Malaysian healthcare sector is poised for sustained growth in 2024, bolstered by the Health Ministry’s enlarged budget allocation, close collaboration between the public and private sectors, and the ongoing growth in medical tourism.

Under Budget 2024 the ministry was granted a higher allocation of RM41.2bil, a 13.5% increase year-on-year (y-o-y). This rise in allocation is one of the most substantial y-o-y increases observed in recent years.

This aligns with the government’s goal of gradually elevating Malaysia’s public health expenditure to 5% of gross domestic product (GDP) versus an estimated 2.9% in 2021.

Hong Leong Investment Bank (HLIB) Research said the elevation of the country’s public health expenditure carries positive implications for healthcare counters under its coverage such as DKSH Holdings (M) Bhd, as it is involved in the distribution of pharmaceuticals, over-the-counter products and consumer health items to the public-healthcare sector.

Apart from that, the research house said private hospital operators like IHH Healthcare Bhd and KPJ Healthcare Bhd would also potentially receive more cases redirected from the public sector.

“Additionally, the bigger budget also presents UMedic Group Bhd an opportunity to supply more medical equipment and consumables to the public sector,” it noted.

After completing a series of greenfield expansions pre-Covid-19, KPJ is now shifting its focus to optimising its existing hospital capacity and prioritising brownfield projects over new hospital openings.

In the near term, KPJ aims to add 368 beds bringing its total to 4,101.

Similarly, IHH is also concentrating on organic brownfield expansion, with plans to add 3,800 new beds by 2028, representing a significant 33% increase in capacity across its key markets.

As for UMediC, its upcoming expansion is set to double its manufacturing capacity to 600,000 bottles of pharmaceuticals per month.

“We gather that the authorities have conducted inspections at the new site and the company is currently awaiting the certificate of completion and compliance to be granted before moving machinery in.

“Given the robust demand for its in-house manufactured products, UMediC foresees full utilisation of the added capacity by mid-calendar year 2024,” the research house said.

To address the strain on the public-healthcare system, the Health Ministry has emphasised the importance of inter-sectoral collaboration in its Health White Paper.

Effective public-private partnerships are important to distribute resources and relieve overwhelming demand in the public sector while at the same time optimising excess capacity in the private sector, the research house said.

On medical tourism, HLIB Research said: “Our channel checks suggest that Malaysia is on track to potentially achieve RM2bil in medical tourism revenue in 2023, surpassing our initial targeted timeline of 2024 by a year.”