Delve into the Healthcare business, a business sector that offers investment opportunities.

Healthcare business is a business sector that has significant growth potential and investment. From the trend that the world is entering the aging society. The way of life in the big cities that change Including severe epidemics such as the Covid-19 virus. Khun Thanapol Itthinidipak, Vice President - Head of Thailand Business, BlackRock Inc., came to provide detailed knowledge of the Health Care business in Thailand and globally. With investment specialist Khun Sukit Udomsirikul, Managing Director of Research, Siam Commercial Securities Company Limited (SCBS) and Khun Sornchai Suneta, Managing Director, Chief Investment Office, Siam Commercial Securities Co., Ltd. participated in a discussion on healthcare business investment opportunities.

Overview of the Healthcare business in Thailand and other countries


When talking about investing in the Healthcare business in Thailand, most people are familiar with the private hospital business. Which is the only Healthcare business in Thailand that can be invested. But when looking at the global healthcare business picture, there are many businesses involved in this industry. Which Mr. Thanapol mentioned about the global healthcare sector, divided into 4 main business groups, 1 service sector as follows

1. Pharmaceutical business group Namely pharmaceutical companies Which produce and sells drugs, divided into 2 types: Original and Generic  

  • Original medicine is a patented drug In general, the invention of each drug since research Experiment in animals until it can be used in humans, it will take about 20 years. When invented, the drug company will patent the patent to produce and distribute the product solely. Most of them are patented for 20 years. In the last 20 years is the time when Original drugs can earn and have high-profit margins.

  • Generic drugs are generics or drugs that the patent has been expired. Therefore, can produce quickly, at a low cost. However, the production of Generic drugs is highly competitive. Because it must compete with China with low production costs, resulting in a low-profit margin too


    However, investment in the group Pharmaceutical will focus on a group of world-class pharmaceutical companies that produce original medicines in developed countries such as Johnson & Johnson (United States), Roche (Switzerland), Takeda (Japan), and Sanofi (France), etc. In Thailand, Generic is produced by the Pharmaceutical Organization and private pharmaceutical companies.

 

2. Biotechnology Business Group Is the study of organisms for use. Such as GMO plants, chromosome modification, and the important thing is the production of various vaccines. Especially now that over 4 million patients worldwide and the world are waiting for the vaccine against the Covid-19 virus. Khun Thanapol views that in the treatment of patients with Covid-19, this should be expected to have vaccines. Doctor Anthony Fauci, head of the US Plague Center said that the vaccine is expected to be produced by the end of 2020. Commercial production should be possible in the second half of 2021. From the current situation Make shares in the group 

3. Healthcare Equipment & Supplies business group that produces medical devices, divided into 3 types. Including disposable equipment (Single-Use Devices) such as syringes, syringes, rubber gloves, etc., accounting for 20% of production. Durable medical devices (patient beds, wheelchairs, medical devices using high technology Diagnostic tools for 75%. And reagents and test kits for laboratory use, with a 5% share. Which the most profitable thing is Durable equipment Follow with the disposable style. And diagnostic reagents.


Companies in the medical device business group, such as Abbott, Medtronic, DePuy Synthes of the United States, Siemens of Germany, etc. The country that exports the most medical devices in the world is Germany, followed by the United States, Japan, and China, which is ranked 4th. However, medical devices manufactured by China Will be just a tool that uses moderate technology Different from the top 3 countries that produce, export, modern tools, use advanced technology. In Thailand, Most exports of medical devices in ASEAN Most of them are disposable devices. Such as rubber gloves, the second-largest exporter in the world because we have a lot of rubber raw materials. But even though Thailand exports most medical devices in ASEAN but when looking at the details the manufacturing company is a foreign company that uses raw materials in Thailand for export production. The other is the disposable equipment business is a difficult market. Since it does not require advanced technology, anyone can come in to do it. The brand has no value, competes at a price. Customers can change the brand at any time.
 

4. Healthcare Providers group is private hospitals. Have income from medicine Services of medical personnel Lab / X-ray examination and the room. This is an important factor in the hospital business competition is to have a large hospital network. Because it will be an advantage of the Economy of Scale in the purchase of many medical devices for use in all affiliates. Including the potential to capture a high-middle level customer base Both domestic and abroad. Merger and acquisition are therefore a key strategy in the hospital business. If it is a small hospital Must have expertise in such areas as eye hospitals, for example. Leading hospitals such as UnitedHealth Group, Teladoc Health of the United States, BDMS, and Bumrungrad International in Thailand.


5. Healthcare Insurance
 is a service that is in the Healthcare industry and is very important in countries like the United States where medical expenses are high. But the state welfare is less when compared to other developed countries. The state's medical expenses are only Medicare for the elderly and Medicaid for low-income people. Most of the rest of the population must have their own health insurance. 

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Why invest in Healthcare
 

The tendency of the healthcare business to grow in the long term is due to the changing structure of most of the countries that are entering the aging society. It is estimated that in 2020 1 billion people will be over 60 years old, accounting for 14% of the world population of 7,300 million people. Resulting in an increasing number of patients the illness in most elderly patients is a chronic disease that requires continuous medical visits. Such as pressure, diabetes, atherosclerosis, etc. In addition, lifestyle in big cities is a cause of obesity and various complications. Another reason is that in many countries, the state has better-managed health insurance systems, when the system is good, when people get sick, they go to see more doctors. Drug use also increases as resulting in the healthcare business to grow.


For short the spread of the virus COVID-19 makes people turn to health care more. Although the Healthcare Provider business may be sluggish because people are worried about not wanting to go to the hospital together with enforcing the Physical Distancing. But in the Medical Equipment and Suppliers segment, it received positive results from the need for medical devices such as respirators and disposable equipment. In the business of Biotechnology, the share price of Modena, the inventor of the vaccine, has increased from 250-300% at the beginning of the year.

How to invest in the Healthcare business
 

Mr. Thanapol suggests investing in the Healthcare business in 3 ways: 1) Investing in individual shares Both in Thailand and abroad. 2) Buy mutual funds, invest in the Healthcare industry, managed by professionals. 3) Invest in ETFs (Exchange Traded Fund), index funds listed on the Stock Exchange.
 

Regarding the investment in Healthcare shares in Thailand, Khun Sukit further analyzed that although the hospital shares were affected by the Covid-19 crisis Resulting in fewer patients visiting the doctor at the hospital and the foreign patient group disappeared. However, Telemedicine technology has been used instead and this situation will gradually improve when the number of people infected reduces. As for international patients, they must wait for their return journey. BDMS is the 4th largest healthcare group in the world. The proportion of foreign patients is 30%, less than BH with 66% foreign patients. According to the SCBS analysis, it is expected that businesses affected in the first half of 2020 from Covid-19 will begin to recover in the second half of the year 2020 and the operating results may have long-term growth potential. Both the elderly society Specialized treatment center and international patient growth