New Healthcare Investment Opportunities in Pakistan
Pakistan is located on the Asian continent. Pakistan also has a coastline along the Arabian Sea and the Gulf of Oman of the Indian Ocean. Pakistan borders four countries: Iran and Afghanistan, China and India.
After several experiments in economic restructuring, Pakistan currently operates a mixed economy in which state-owned enterprises account for a large portion of gross domestic product (GDP). The country has experimented with several economic models during its existence.
In terms of the structure of its economy, Pakistan resembles the middle-income countries of East and Southeast Asia more than the poorer countries of the Indian subcontinent. Economic performance compares favourably with that of many other developing countries; Pakistan has maintained a sustained and fairly steady annual growth rate since independence. At the same time, there has been a relentless increase in population, so, despite real growth in the economy, output per capita has risen slowly. This slow growth in per capita income has not coincided with a high incidence of absolute poverty, however, which has been considerably smaller in Pakistan than in other South Asian countries. Nonetheless, a significant proportion of the population lives below the poverty line, and the relative prosperity of the industrialised regions around Karachi and Lahore contrasts sharply with the poverty of the Punjab’s barani areas, semiarid Balochistan, and Khyber Pakhtunkhwa.
Economic and Financial Snapshot of Healthcare in Pakistan
Pakistan is a known low-spender on health. To put things into perspective, according to estimates done in 2017-18, Pakistan spent $45 per person on health, while Iran spent $484 and Qatar spent $1,716 per capita.
In 2019, health expenditure has a share of GDP for Pakistan was 3.4 %. However, the figure is slightly more than 2017-18’s (1.2% of GDP). The cumulative health expenditure by the federal and provincial governments went up to 14.35% from Rs. 421.78 billion in 2020 to Rs. 482.27 billion in 2021.
In 2019, 53.8 percent of Pakistan’s healthcare costs were paid out of pocket. From 61.5 percent in 2000 to 53.8 percent in 2019, Pakistan’s out-of-pocket spending as a percentage of current health spending decreased gradually.
Pakistan’s chronically low levels of public expenditure on health have produced a situation where the private sector plays a relatively greater role in the wider healthcare system—accounting for nearly 80% of all primary health care service delivery and 70% of total health expenditures. Systemic overreliance on the private sector for health service delivery, combined with almost no risk pooling in public health financing, has implied that Pakistan’s OOP expenditures remain higher than most of its comparators.
Healthcare Investment Opportunities
Healthcare services and medical devices are in high demand in Pakistan, especially in the growing private healthcare market. The Government of Pakistan (GOP) spent about $785 million on healthcare in the fiscal year ending June 2021. Private hospitals and clinics are expanding rapidly, especially in cities, catering to a rapidly growing middle class. According to a well thought-of research study, the medical devices market in Pakistan is estimated at $500 – $600 million with an estimated growth rate of 15 percent CAGR over the next five years (2019-2023). U.S. healthcare services and medical equipment are generally well-received in Pakistan and are known for their high quality.
Health Insurance
It is estimated that by the year 2050, Pakistan would be one of the most populous nations. With an annual population growth nearing 2.5%, it becomes difficult for the government to provide satisfactory health services to the entire population. Private health insurance is on rise due to increasing discontentment with public health insurance, globalisation and better awareness about health-related issues. It has opened a window of opportunity for private industry. As demand skyrockets, it would put pressure on the suppliers to come up with better quality and increased innovation.
Pharmaceuticals – Special Economic Zones (SEZs)
The Pakistan government has approved the establishment of 16 Special Economic Zones, SEZs across the country, with the objective of expanding the industrial base for export-oriented manufacturing. SEZs are open to investors from other countries. The sectors in which industries in SEZs are likely to be established are auto and allied industries, textiles, plastics, agriculture implements, food processing, pharmaceuticals, chemicals.
The National pharma industry has shown growth over the years, particularly over the last decade. The industry is trying to upgrade itself and today the majority industry is following local Good Manufacturing Practices (GMP) laws, with a few in accordance with international guidance.
The Pakistan pharma industry is relatively well known in the Developing Asian markets with an export turnover of US$1 Billion. Its main partners included neighbouring Afghanistan which itself doesn’t have a medicinal industry, Tajikistan as well as other central Asian republics. In the past, Sri Lanka used to be Pakistan’s biggest medicinal importer however trading volumes have recently slightly subsided. Now more companies are having interest in investing in Pakistan’s medicinal Industries. Companies like Merck, Abbott and GlaxoSmithKline have reported a great increase in profits in 2013.
Hospitals
Hospitals are a major industry in Pakistan. The following facilities are expected to grow: General Hospitals, Specialised Hospitals, Cancer Care, Cardiac Care, Kidney Transplant Centres, Liver Transplant Centres, Dialysis Centres, E.N.T, Neurology, Orthopaedic care. Investing in Health Infrastructure in Pakistan can help improve the medical tourism for patients from countries such as Afghanistan and Iran.
Surgical Instruments
Across the globe, Pakistan is considered a reliable manufacturer of surgical instruments, due to their good quality and reasonable price. Around 300 medium- to large-size companies manufacture a wide variety of medical instruments covering all the kinds of surgery and basic medical services. More than 90 per cent of this is exported across the world. Major export destinations are the US, Germany, UK, France, Belgium, Netherlands and China. The majority of Pakistani surgical companies are ISO-9002 certified and have secured good manufacturing certification. Adoption of best practices and safety standards has enabled Pakistani manufacturing companies to integrate with the global supply chains.
Conclusion
A country of 208 million people with rich cultural, ethnic and linguistic diversity, and facing complex development challenges, Pakistan has to learn and innovate, evolving and adapting successful models from across the globe. A key aspect of the country’s implementation strategy is strengthening the existing alliances and forging new ones, while leveraging technology and mobilising finance. Partnerships and close collaboration with a broad array of governmental, private sector, civil society, media stakeholders and international development partners, supplemented by regional and international support, will continue to be a major feature.
New and well-thought-out ways for financing needs to be explored – including diaspora funds, impact investments, venture funds for innovative solutions, financial tagging and Green ‘Sukuk’. In tandem, Pakistan is aligning its budgetary process, including its development funding, with the SDGs. Efficient, result-oriented investments can be maximised by picking out leverage points which connect with most SDG targets and have a higher multiplier impact.
Improvement in health has economic implications. Investment in the health sector in the recent past has shown improvement in health indicators. Life expectancy has slightly improved over the years from 59.1 years in 1990 to 64 years in 2005. Infant and maternal mortality rates decreased significantly over time.14 According to Pakistan economic survey 2006-07,15 healthy population positively contributes to the economic and social development. Therefore, a country’s investment in health sectors can have a long-lasting effect on its prosperity. If people are healthy, productivity and economic development will automatically improve.
For more information about the Country and Healthcare opportunities in Pakistan, you can visit the company website on www.hospaccxconsulting.com or contact us directly.
Related Team Members
