Higher 2020 budget seen supporting healthcare market growth
MANILA, Philippines — The “significant” increase in the budget of the Department of Health will be a “positive” for the Philippines’ healthcare sector this year and should provide commercial opportunities for pharmaceutical firms and healthcare providers.
President Rodrigo Duterte last Monday signed into law the P4.1-trillion national budget for 2020, his government’s largest spending plan to date.
The social services sector accounts for the largest bulk of the budget at P1.495 trillion or 36.5% of the total. The funds would be used to support capital development programs in education, health and social protection.
Upgrades to DOH medical infrastructure
In a research note, Fitch Solutions said the higher funding for health services will provide scope for the DOH to build and upgrade medical infrastructure nationwide and address the need to have more health personnel in public health facilities.
The Philippines' healthcare and pharmaceutical market is also expected to experience robust growth driven by the country's concerted effort to improve the health and well-being of its population.
“We expect healthcare expenditure in the Philippines to grow steadily through to 2029, rising from P897.4 billion ($17.2 billion) to P3.1 trillion ($60.7 billion), representing 4.5% of (gross domestic product) in 2019,” the Fitch unit said.
‘Risks’
But in the same research note, Fitch Solutions warned that Duterte’s planned wide-ranging price cuts to expensive medicines primarily sold by foreign pharmaceutical companies “may not deliver the intended benefits.”
According to Fitch Solutions, the government hopes that the introduction of maximum retail prices, or MRP, will widen access to medicines and improve health outcomes.
The majority of the drugs affected by the MRP are newly introduced products for the treatment of cancer, diabetes, cardiovascular conditions and other chronic diseases, Fitch Solutions explained. Many are complex biologicals.
“Large drugmakers from Europe and the US are most exposed to the initiative. However, the scheme will also affect local distributors, pharmacies and private hospitals,” the Fitch unit said, adding that such a system “could hinder the introduction of future pharmaceutical innovations.”
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