Assuming an international investor is looking forward to invest in healthcare sector in Pakistan. Here is a preliminary analysis report on "Investment Report On Healthcare Sector In Pakistan" based on secondary research I have done.
2. 1: Wikipedia, the free encyclopedia
2 & 3: Pakistan Economic Survey 2013-14
• Healthcare in Pakistan is administered mainly in the private sector which
accounts for approximately 80% of all outpatient visits. Pakistan's healthcare
system has both public and private options. There are government-run
hospitals which are low-cost and offer basic medical treatment, and expensive
private medical facilities.1
• According to Pakistan’s Investor Guide 2014-15, ‘’Healthcare spending in
Pakistan is expected to increase from PKR 521.91 Billion (USD 5.59 Billion) in
2013 to PKR 986.53 Billion (USD 9.2 Billion) in 2017’’.
• It is very much encouraging that during the fiscal year 2014, the health
expenditure increase by 28.78 percent over last year, which is an indicator that
present government is making best efforts to provide better health facilities to
general public.2
• The shortage of trained health workers and the rising population pressure on
public health institutions has allowed the private sector to bridge the
demand/supply gaps.3
OVERVIEW
3. 1: www.infoplease.com/world/statistics/most-populous-countries.html
• It has been years now, that in South Asia Region after India, Pakistan stands out
as second largest populated country with population of 185.04 Million and
leaving behind India in annual population growth for years 2010- 2014, and its
annual growth rate was 2.1% compared to 1.23% of India, in year 2014.
World Bank: Data Base; World Development Indicators
Country Name Population 2010 [YR2010] 2011 [YR2011] 2012 [YR2012] 2013 [YR2013] 2014 [YR2014]
Pakistan Total 170,043,918 173,669,648 177,392,252 181,192,646 185,044,286
Pakistan Growth (annual %) 2.09 2.11 2.12 2.12 2.10
Afghanistan Total 27,962,207 28,809,167 29,726,803 30,682,500 31,627,506
Afghanistan Growth (annual %) 2.74 2.98 3.14 3.16 3.03
Bangladesh Total 151,616,777 153,405,612 155,257,387 157,157,394 159,077,513
Bangladesh Growth (annual %) 1.13 1.17 1.20 1.22 1.21
India Total 1,230,984,504 1,247,446,011 1,263,589,639 1,279,498,874 1,295,291,543
India Growth (annual %) 1.37 1.33 1.29 1.25 1.23
Sri Lanka Total 20,653,000 20,869,000 20,328,000 20,483,000 20,639,000
Sri Lanka Growth (annual %) 0.99 1.04 - 0.76 0.76
• Pakistan is the sixth most populous nation around the globe with an estimated
population of nearly 199 Million.1
PROSPECTS FOR HEALTHCARE SERVICES IN
PAKISTAN
4. World Bank: Data Base;; Health Nutrition and Population Statistics
• According to world
development indicators, the
total fertility rate (births per
woman) in Pakistan has been
dropped from 3.9 to 3.68 in
years 2010-13. Fertility rate is
still much more than all other
countries in South Asia region,
except Afghanistan where
total fertility rate is higher but
has decreased more than that
in Pakistan and has reached
5.05 in year 2013.
• Pakistan has also the second most fastest growing population after Afghanistan
in its region, with an annual population growth rate of 2.1% as compared to
3.03%, of Afghanistan for year 2014, but with respect to total population
Afghanistan with total population until 2014 of only 31.6 Million, stands not
even near to Pakistan.
PROSPECTS FOR HEALTHCARE SERVICES IN
PAKISTAN
5. Pakistan Economic Survey 2014-151: Pakistan Economic Survey 2014-15
• Although Real GDP Growth Rates of Pakistan
has been lower than other countries in South
Asia, but still Pakistan has picked up pace and
has shown growth in recent years.
• The GDP growth recorded at 4.24 percent in
the outgoing fiscal year 2014-15 as compared
to 4.03 percent last year. Continuously
achieving higher GDP growth during 2013-14
and 2014-15 is an indicator that government
policies are working in better direction and
providing incentives and necessary support
in the picking up of economic activities in the
country.1
Pakistan Economic Survey 2014-15
Comparative Real GDP Growth Rates (%)
Region/Country YR 2009 YR 2010 YR 2011 YR 2012 YR 2013 YR 2014 YR 2015 YR 2016(P)
India 8.5 10.3 6.6 5.1 6.9 7.2 7.5 7.5
Bangladesh 5.3 6 6.5 6.3 6.1 6.1 6.3 6.8
Sri Lanka 3.5 8 8.2 6.3 7.3 7.4 6.5 6.5
Pakistan* 0.4 2.6 3.7 3.8 3.7 4 4.2 5.5
ECONOMIC OUTLOOK & GROWTH POTENTIAL
6. Pakistan Economic Survey 2014-15
3, 4: Pakistan Economic Survey 2014-15
• Per Capita Income would be an important economic indicator how standard of
living has risen. Per Capita Income has shown a significant growth of 9.25
percent in 2014-15 as compared to 3.83 percent last year in dollar term.3
• Board of Investment (BOI) under Prime Minister Office is taking policy measures
to provide more investment friendly environment to investors. BOI’s mandate
covers both domestic and foreign private investment.4
1: Pakistan Economic Survey 2014-15
2: DAWN: Pakistan Economic Survey: Two years of growth and several missed targets
MUHAMMAD OMER HAYAT|HUFSA CHAUDHRY— UPDATED JUN 06, 2015
• Foreign private investment has reached to
$1,666.2 million during July-April 2015 as
compared to $1,050.3 million showing 58.6
percent higher as compared to last year.1
• The State Bank of Pakistan has been pursuing a
loose monetary policy. The central bank slashed
interest rate for a fourth consecutive time since
November 2014—to a 42-year low of seven
percent. This is a clear sign of positive economic
health, especially with regards to prices, such that
the government now wants to spur economic
activity without worrying about higher prices.2
ECONOMIC OUTLOOK & GROWTH POTENTIAL
7. 1, 2: Pakistan Economic Survey 2014-15
3: Daily Times, August 04, 2015: Investors admit improvement in Pakistan’s security situation
4: Daily Times, December 17, 2015: Nisar directs early completion of Islamabad Safe City project
• Pakistan has been suffering for last several years, in terms of economic activities due
to security situations.
• The security situation will be the key determinant of future flow of the investment.
After adoption of National Action Plan by the All Parties Conference (APC) and its
subsequent implementation which is overseen by the apex committees of the
provinces.1
• The loss due to terrorist attacks in 2013-14 and estimated on the basis of 9 months
actual data (July 14-March 15), includes loss of foreign direct investment which has
decreased from $2.01 Billion to $0.09 Billion respectively;2 showing the improving
security conditions in Pakistan and revival of potential foreign direct investment.
• A recent survey with leading foreign investors in Pakistan on security related matters
show positive experience and perception of the security environment in the country
especially after the launch of the operation against criminals in Karachi and Zarb-e-
Azb in tribal areas.3
• For security reasons Islamabad is generally considered to be the safest city in
Pakistan, also because it is the capital of Pakistan and is residential hub for various
diplomatic personnel.
• The authorities have almost completed required work with regard to
operationalization of Islamabad Safe City Project, introduced to ensure security and
protection to life and property of citizens.4
SECURITY SITUATION IN PAKISTAN
8. RECENT HEALTHCARE FACILITIES
• As in case of emergencies and natural disasters, the emergency medical
facilities are only available in major cities as most hospitals possess limited
advanced life support equipment.
• In Islamabad only six hospitals are approved by Pakistan Medical & Dental
Council, for house job/ training in addition to teaching hospitals, which are also
around six according to data provided on Pakistan Foreign Medical Students &
Graduates website.
• Also the fact that conditions and services being provided at public health care
facilities creates a space for private sector to flourish, as the middle class which
forms major portion of population in Pakistan, still look out for better facilities.
• Fast growing population and a high supply of medical human resource highly
demands to take this opportunity of investing in Islamabad.
• According to Pakistan Foreign Medical Students & Graduates, registered total
number of doctors and dental surgeons are 61,067 with basic degrees and
15,710 specialists only in Punjab/ Federal area, until 31st January, 2014.
9. • Further there has been increase in supply of medical personnel as shown in data
by Pakistan economic survey.
• Although population per doctor, per dentist and per bed has been decreasing
but at a slower rate which highlights the demand and supply gap in health care
sector.
• Risks inherent include availability of doctors and nursing staff to provide
treatments to patient needs and staff turnover, which should not be an issue
based on increasing stats shown.
Pakistan Bureau of Statistics, Pakistan Economic Survey 2014-15
Health Manpower 2011-12 2012-13 2013-14 2014-15
Registered Doctors 152,368 160,880 167,759 175,223
Registered Dentists 11,649 12,692 13,716 15,106
Registered Nurses 77,683 82,119 86,183 90,276
Population per Doctor 1,162 1,123 1,099 1,073
Population per Dentist 15,203 14,238 13,441 12,447
Population per Bed 1,647 1,617 1,647 1,593
RECENT HEALTHCARE FACILITIES
10. Ministry of Planning, Development & Reforms, Pakistan Economic Survey 2014-15
Physical Targets/ Achievements 2014-15
Sub Sector
2014-15 Target
Targets Achievements 2015-16
A. Hospital Beds 5,000 3,900 2,500
B. Health Human Resource
Doctors 5,000 3,500 9,000
Dentists 500 350 1,000
Nurses 4,000 3,300 4,500
Paramedics 5,500 4,500 5,500
TBA's 550 450 500
Training of LHWs 10,000 8,000 10,000
C. Preventative Programme
Immunization (Miilion) 8 6 8
Oral Rehydration Salt (Million Packet) 23 20 23
• Every year targets are set to be achieved, but still the stats show there is room
for demand to be met.
• Only 78% of the targets for hospital beds have been met in year 2014-15, hence
setting a lower target of 2,500 beds for year 2015-16, similarly targets for
doctors, dentists and nurses have not been met in year 2014-15 and yet much
higher targets are set for year 2015-16.
• Given the facts and unachieved targets, it gives rise to an ideal situation of
having a 300 bed teaching general hospital with a nursing school.
RECENT HEALTHCARE FACILITIES
11. 1, 2, 3, 4: KPMG Articles: Investment in Pakistan 2013
5: Pakistan Investor’s Guide 2014-15
6: The Express Tribune, May 27, 2012: Money and doctors: Private healthcare spending in Pakistan rises to $7.3 billion
• Foreign investment in Pakistan is fully protected by following Acts: Foreign Private
Investment (Promotion & Protection) Act, 1976 and Protection of Economic Reforms
Act, 1992.1
• Foreign companies can choose between setting up a liaison office, branch office or
incorporate a Pakistani company as either its wholly owned subsidiary or joint
venture with a Pakistani / Overseas partner.2
• Pakistan has signed Bilateral Investment Treaties (BITs) with 47 countries, of which
26 are in force. A further 27 are under negotiations as a means to have stronger
protections for investments of investors.3
• Board of Investment is cognizant that the role of the government is to eliminate or
reduce the level of risk for investors and provide tools for to mitigate/ alleviate
them. The Investment Policy 2013 reinforces the commitment to investors regarding
security and safety of their investments.4
• Various incentives have been offered to attract foreign investment including full
repatriation of capital, capital gains, dividends and profits. Furthermore, according
to various economic commentators, Pakistan has the most liberal investment policy
regimes and public-private partnership frameworks in the entire South Asian
region.5
• There are many reasons why investors, particularly those outside the country may
want to consider investing in this sector. “Pakistan has one of the most liberal
foreign investment regimes in South Asia, with a commitment to low tariffs and
100% foreign equity permitted,” said BMI analysts in the report.6
REGULATORY FRAMEWORK & INVESTMENT
PROTECTION
12. 3
2
1
1, 2, 3, 4, 5: www.sbp.org.pk/departments/ihfd-ifc.htm
• Majority 53% of the businesses have a capital
of less than PKR 10 Million, showing a low
start-up requirement in healthcare sector,
depending on the scale of infrastructure.
• Nearly 60% of business have a total revenue
of less than PKR 10 Million and around 6%
having between PKR 51-100 Million, not least
to state that majority are small setups.
• The segment currently is not paying for any
advisory service and has demonstrated lack
of interest in obtaining advisory services
from banks; only 22% of owners are willing to
pay for it, a majority is of the opinion that it is
not the core function of banks.4
• From our primary survey, SMEs in private
hospitals have preference for long term
equipment financing and vehicle financing.
8% and 10% attributes to long term
equipment financing and Business vehicle
financing respectively.5
FINANCIAL INFORMATION & FUNDING NEEDS
13. ANALYSIS
• Compared to summer, in winter season health issue are increased and still this
sector does not experience cyclical trends as such and also is less supplier
dependent as the business is service based.
• Many organizations provide health benefits to employees, thereby many
hospitals have such organizations enlisted with them and are reimbursed for bills
incurred by their employees.
• Pakistan’s rapidly growing, population, patients, greater awareness on health
matters and lack of maintained infrastructure in public sector should be
considered an asset, placing high preference and need for development in
healthcare services.
• Human resource is increasing every year. Number of doctors, dentists and nurses
have not been registered with Pakistan Medical and Dental Council and
practicing hospitals.
• Weaknesses and threats that can soon become opportunities, are security
concerns and less availability and use of financial products for this sector; for
which reason Islamabad seems to be a much safer place for investment.
• Key players in private sector are Shaukat Khanum Cancer hospital and National
hospital in Lahore, and Agha Khan hospital, Ziauddin and Liaqat National
hospitals in Karachi and, which implies a less fierce competition in Islamabad, on
a bigger scale.
14. 1: www.sbp.org.pk/departments/ihfd-ifc.htm
2: http://islamabad.usembassy.gov/pr-031115b.html
• The factors, that Pakistan has high population growth rate, rising life expectancy
as a major part of population is young and consequentially would rise to older
age group, increasing foreign direct investment, increasing urbanization and
number of doctors, should encourage investments in new teaching hospitals and
growth of healthcare services.
• Low public expenditure by government, lack of expansion in the public health
sector, increasing population with rising income levels indicates a high potential
for growth for the private hospitals. According to our primary survey
conducted, it has been observed that 94% of the respondents perceive great
growth in their business especially in the next five years.1
• At U.S- Pakistan business opportunities conference U.S Ambassador delivered
closing remarks and said ‘’ we are advancing our shared goals in support of
peace, prosperity, and stability for Pakistan, the United States, and this entire
region. We will continue to work with the government and with all of you to
realize the full economic potential of Pakistan’’.2
• Conclusively, there exists large and accommodating demand for quality
healthcare services in Pakistan and current scenario suggest a high time and
opportunities for entry into this business venture.
CONCLUSION
