Corporate finance consulting firm Fortman Cline said foreign funds are keen to invest in the Philippine healthcare industry amid its ongoing consolidation.

Francis Del Val, Fortman Cline managing director, said private equities from around the world — Asia, United States and Europe — are “very much excited to participate in the growth story of the Philippines” as they see a “sweet spot” in the healthcare industry.

“As we know, there are already quite a number of large conglomerates in the Philippines.

And naturally, they want to expand their footprint across different industry sub-sectors. But equally, there’s foreign capital from overseas that is seeing the promise of a healthcare that continues to expand. So they want to work with the middle market. They want to work with entrepreneurs who have built successful businesses so that they can scale and they can move up to be a national player, perhaps even a regional player,” said Del Val.

Thus, he noted the formation of alliances in the “highly fragmented” healthcare industry, “creating integrated ecosystems among industry players.”

Del Val said the industry is poised for further growth against the backdrop of an estimated P1.16 trillion spending in the sector, which continues to grow and has posted 15 percent growth as of 2021.

“That’s a lot of of money that is being spent on building hospitals, or renovating hospitals, or being able to pay for claims, both from HMOs (health maintenance organizations), private sector as well as the public sector. And we are just at the beginning,” he said.

Del Val noted that the local healthcare industry is still highly-fragmented with multiple brand leaders across various sectors: medical supplies distributors, pharmaceutical firms, hospitals, diagnostic centers, retail pharmacies, retail medical device/equipment suppliers and HMOs.

“Thus, consolidations and alliances are seen to emerge to allow the industry to become more efficient, respond faster to emerging trends in the healthcare industry as well as to the impact of the Universal Health Care (UHC) which was signed into law in 2019,” he added.

As the consumer-driven Philippine economy grows, a bigger middle class with higher purchasing power and increasingly sophisticated preferences is being created nationwide, particularly in highly urbanized cities, Del Val pointed out.

“The affluent down to the growing upper middle class is seen to patronize private healthcare providers while the lower socio-economic class is given greater access to healthcare by the government because of the UHC,” he said.

“UHC implementation will increase competition between private and public sector by providing options. As the government increases investments, private hospitals that do not invest may not be able to keep up,” he added.

According to Del Val, competition will continue to increase between the private and public sectors over already scarce human resources.

“Rising administration costs and competition from the public sector will force smaller hospitals to consolidate with bigger ‘megabrand’ hospitals to survive,” he said.

Citing Department of Health (DOH) data, Del Val said there are 1,071 private hospitals and 721 public hospitals, with 70 of the public hospitals being operated by the DOH. – Ruelle Castro

Share prices ended lower Thursday as investors opted to hold on to cash after the US Fed raised rates by 75 basis points and the Bangko Sentral ng Pilipinas by another 50 basis ponts.

The Philippine Stock Exchange index (PSEi) was down 39.98 points, a 0.63 percent drop to 6,301.71.

The broader all shares index was down 29.28 points or 0.86 percent to 3,356.24.

Losers edged gainers 156 to 41 with 34 stocks unchanged. Trading turnover reached P5.92 billion.

Luis Limlingan, managing director at Regina Capital and Development Corp. said the market struggled to find a footing Thursday as traders weighed the new round of rate hikes.

“The Fed pledged to keep its aggressive stance in pushing the interest rates to combat inflation until it reaches a terminal rate of 4.6 percent in 2023,” he said.

Most actively traded International Container Terminal Services Inc. was steady at P181.

Ayala Land Inc. was down P1.40 to P25.55. Converge ICT Solutions Inc. was down P1.90 to P14.92. SM Investments Corp. was up P1 to P819.50. San Miguel Corp. San Miguel Corp. was down P0.35 to P97.65. Emperador Inc. was down P0.10 to P20.25. SM Prime Holdings Inc. was down P0.70 to P34.20. Universal Robina Corp. was down P1.70 to P115.30. Monde Nissin Corp. was down P0.54 to P12.96.

“The 2Y yield already running ahead of the Fed funds rate, and some safe-haven flows amid geopolitics might have been factors preventing the yield from reacting more to the FOMC outcome earlier,” Frances Cheung, rates strategist at OCBC Bank, said in a note.

Higher yields strengthen the dollar, boosting the appeal of Treasury notes and the greenback, and in turn weigh on riskier Asian assets.

“More aggressive rate hikes will further hurt growth while keeping inflation expectation anchored; such inflation-growth matrix shall limit the upside to the 10Y yield at least in the near term,” Cheung said.

The US Federal Reserve delivered its third straight rate increase of 75 bps Wednesday night and signaled more hikes to come, underscoring its resolve not to let up in its fight to contain inflation.

Bank Indonesia (BI) is expected to raise its key interest rate another 25 basis points at its meeting later in the day,

The Bank of Japan remained an outlier among a global wave of central banks that are withdrawing stimulus to battle inflation, as it maintained ultra-low interest rates and dovish policy guidance on Thursday at a policy meeting.

Investors in Asia are also awaiting a policy decision from the central bank in Taiwan, with a mild interest rate hike expected, according to economists polled by Reuters. The island’s economic growth, exports and inflation are all slowing. –with Reuters