BMI View: Singapore's healthcare sector is small, but will post steady growth over the next decade. The key drivers of this expansion are a growing economy, an ageing population, more chronic diseases and continued government commitment to providing quality medical services. Local healthcare providers will continue to realise the majority of the sector's upside. The risks to this reasonably optimistic outlook are reduced investment in infrastructure, such as new hospitals and clinics, and wage restrictions for doctors and nurses.

Healthcare expenditure is forecast to increase from SGD839mn (US$615mn) in 2010 to SGD873mn (US$649mn) in 2011. Due to the strengthening Singapore dollar, this equates to local currency growth of 4.0% and US dollar growth of 5.6%. Healthcare spending accounted for 3.34% of GDP in 2010, which is well below the regional (5.27%) and global (6.89%) averages. Through to 2015 and 2020, we are projecting local currency compound annual growth rates (CAGRs) of 5.9% and 4.7%, respectively, for Singapore's healthcare market.

Singapore's economy was one of the fastest growing globally in 2010. Real GDP expanded by an impressive 14.98%, albeit from a 1.28% contraction in 2009. Significantly for the healthcare sector, fiscal expenditure rose from SGD40.87bn (US$28.14bn) in 2009 to SGD45.18bn (US$33.10bn) in 2010 - an increase in local currency of 10.5%. BMI's Country Risk team forecasts real GDP growth rates of 5.05% and 3.91% in 2011 and 2012, respectively.

The number of people living in Singapore is forecast to increase from 5.1mn in 2010 to 5.5mn in 2020 - a rise of 7.8%. Over the same period, the proportion of the population aged over 65 years is projected to jump from 13.7% to 23.1%. The ageing demographic profile is compounded by a low birth rate, resulting in the dependent ratio (those aged 15+ years and 65+ years as percentage of total population) increasing from 34.7% in 2010 to 40.6% in 2020.
Over the next five years, BMI expects Singapore's government to increase its share of healthcare spending, which is contrary to the trend seen in most developed countries. Private sector spending as a percentage of total medical service expenditure will decrease from 62.96% in 2010 to 60.00% in 2015. Nevertheless, out-of-pocket payments will continue to represent the majority of the healthcare market.

Chronic diseases are becoming more common in Singapore. For example, the prevalence of hypertension among people aged 18-69 years increased from 22.2% in 1992 to 24.9% in 2004. Over the same period, the prevalence of obesity in the same population grouping rose from 5.1% to 6.9%. Indicative of a developed country, the top two leading causes of death are currently cancer and ischaemic heart disease.

BMI: The Singapore Pharmaceuticals Competitive Intelligence Report 2010:
www.reports-research.com/market-surveys/singapore-pharmac...

BMI: Singapore Pharmaceuticals and Healthcare Report Q3 2010:
www.reports-research.com/market-surveys/singapore-pharmac...

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