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Health & Fitness

Where to put your cash in healthcare this year

 

As the New Year settles, the health industry holds prospects for those with interest in investing in the sector. Across many fronts, 2017’s robust action should resume as the wait and see the approach of the political season cools off.

The majority of activity is still seen to be dominated by foreign medical firms. However, a few local non-medic investors are slowly warming to healthcare as an alternative destination of idle capital. More so those with high liquidity and patience. Certainly health sector returns take longer to mature than retail and fast moving consumer goods, but in the end, we have less volatility in our return on investment.

In 2018, mergers and acquisitions will possibly increase, especially for the mid-tier facilities keen to consolidate positions and fend off the reach of the top 10 health franchises that are all expanding across the country. For this, financial advisory firms and lenders stand to gain.

As competition tightens across equipment vendors, manufacturers and distributors, the bigger firms may be forced to shift either vertically or horizontally to allow for survival. Already some of the diagnostics suppliers are partnering in new ways like establishing labs, franchising partnerships, equipment placing or venturing downstream to the service level via subsidiaries.

With increasing duration in making a sale, vendors of heavy and expensive medical equipment will have to adopt placement as a strategy to generate short-term cash. Doctors keen to contain costs should also consider leasing.

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The pharmaceutical industry will also see notable changes as the industry begins to formalise itself as a reaction to increased health insurance penetration. Universal Health Coverage is being adopted across many counties and may see a shift of demand to the public side. More so the free National Hospital Insurance Fund plan by the Ministry of Education expected to add close to 150,000 new beneficiaries.

Manufacturers may be keen to grow their product lines as well as improve their capacity and products. Already, three new plants are in the pipeline as well as existing ones to expanding their international markets by seeking quality manufacturing certification critical for this.

Hospital beds are still in shortage with modest estimates for an annual 25,000 across hospital specialties.

The growing population is easily outstripping existing capacity while old age and strict adoption of medical guidelines for admissions may see more and more patients admitted.

Contractors and construction firms could also benefit from activity on the public side as well since new governors and MCAs are keen to deliver on campaign pledges.

Safe areas for those investing are those aligned with diagnostics since patients are willing to pay more to know what ails them.

Healthcare technology vendors such as electronic medical records and smart chips for the security of health systems are also good bets.

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