Fortman Cline Capital Markets, a leading boutique investment bank in Southeast Asia, sees big opportunities for mergers and acquisitions in the Philippine healthcare industry because of its highly fragmented nature.
Fortman Cline Management Services managing director Francis Del Val said Monday in a media roundtable the company received strong interest from foreign private equity funds that are willing to invest in various industries in the Philippines including healthcare sector.
Domestic healthcare players are also on the lookout for acquisitions and are aggressively expanding their operations, he said.
Del Val said these trends are creating opportunities for smaller hospitals to consolidate with bigger ‘megabrand’ hospitals to compete and survive.
“The winners will be those that provide the most service-oriented patient experience that delivers optimal health outcomes at the most reasonable or affordable price,” Del Val said.
Del Val said local healthcare industry is still highly-fragmented with multiple brand leaders across various sectors such as medical supplies distributors, pharmaceutical firms, hospitals, diagnostic centers, retail pharmacies, retail medical device/equipment suppliers and health maintenance organizations.
“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 which was signed into law in 2019,” Del Val said.
He said while the affluent and the growing upper middle class are expected to patronize private healthcare providers, the lower socio-economic class is given greater access to healthcare by the government because of the UHC.
Del Val said private hospitals that do not invest may not be able to compete, as UHC implementation will increase competition between private and public sector by providing options and as the government increases investments in government-owned hospitals.
Data from the Department of Health show the Philippines has 1,071 private hospitals and 721 public hospitals. Among the public hospitals, 70 of them are being operated by the DOH.
The Philippines’ hospital owners are led by Metro Pacific Health (3,895 beds), United Laboratories’ Mount Grace Hospitals (1,700 beds), St. Luke’s Medical Center (1,250 beds) The Medical City (1,040 beds) and AC Health (531 beds and over 100 clinics).
