Analysis: Opportunity Knocks in Myanmar Health Market

After a visit to Myanmar, Jiadi Yu, principal investment officer at the IFC in Hong Kong, is optimistic about the country’s health market.

Myanmar is an exciting place for investors. The new government led by Aung San Suu Kyi is encouraging private sector development and foreign investment. The country is gradually opening itself up for business to the rest of the world.

IFC is glad to be part of the process. Since setting up an office in Yangon in 2012, we have focused our investments on building up road and power infrastructure. We are keeping a watchful eye on the health sector – hence my recent visit, where I met several local top tier private healthcare providers.

Development of the healthcare system is strongly tied to improvements in general infrastructure. The electricity sector is a particular bottleneck. Just 30% of Myanmar’s 54 million residents have access to power. Hospitals cope with the power supply shortage by installing their own generators. But lack of infrastructure explains partly why there are no medical device manufacturers and few pharma producers in the country. Myanmar’s medical drug market was worth US$390 million in 2014. Much of this was in the form of generics imported from India.

The health system is very public sector-led, with public facilities comprising 86% of the total. The private sector is expanding, however. There are now 205 private hospitals, most of them small in size – the largest one I visited in Yangon has 220 beds, and roughly 90% have fewer than 100 beds.

On the demand side, non-communicable diseases are a growing problem, accounting for 60% of deaths in 2015. Infectious diseases remain a threat too. The country has, for example, one of the highest tuberculosis rates in Asia.

The supply of health services, however, falls far short of demand. Myanmar’s rich, for instance, often travel abroad for procedures – from check-ups to heart surgery to cancer treatment. They spend US$250 million on medical tourism, with Thailand, Singapore, and India the top destinations. Some of this money could be kept inside the country if higher quality healthcare options were available. The good news is that local sponsors are planning a number of greenfield hospitals targeting this segment of the market.

A significant barrier to accessing healthcare services is the low penetration rate for health insurance. Myanmar has one of the highest out-of-pocket expenditure rates in the region – close to 70% in 2015.

What I found perhaps most striking about Myanmar’s healthcare system is the severe shortage of human capital, especially nurses. Each year, the country churns out 1,300 medical graduates – but only 400 nursing graduates. Myanmar is the only country in southeast Asia where there are more doctors than nurses graduating. Public hospitals take up almost all of the nursing graduates, leaving private hospitals struggling to find the nurses they need.

The private hospitals I visited meet this challenge in different ways. Some train healthcare assistants to supplement the nurses; some send new recruits to the Philippines for training; and some hire foreign nurses to train the local nurses. All told me that they would like to set up their own nursing school and expect the government to grant their operating license soon. These private nursing programmes will help to alleviate the manpower shortage.

There is a shortage of doctors too – at least in the private facilities. There is no private medical college in Myanmar. All doctors, once they acquire their specialisation, are contractually bound to serve in public hospitals for at least five years. Private hospitals are grappling to access specialists in public hospitals by offering consultants positions but that means they may arrive at their clinic after doing a full days’ work at a public facility. In addition, many doctor graduates, discouraged by the low salaries offered at home, have moved to neighbouring countries such as Singapore or Thailand over the past decades. The tide may be turning, however: in the past couple of years, some overseas specialists have been enticed back by increasing opportunities in the private sector.

Overall, I left Myanmar feeling upbeat.  With the government easing restrictions on foreign and private investment, and patient demand for better quality healthcare services on the rise, Myanmar’s health market is pregnant with possibilities. The government has adopted a goal of achieving universal health care by 2030 so we can expect expenditures to grow significantly. Private investors will be a big part of the market’s development and IFC plans to be at the table.

 

Source: Health Investor Asia

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