BMI View: The considerable increase in government health expenditure in 2012 highlights Myanmar's commitment to improving healthcare. However, there are several barriers to the improvement of medical services, such as limited funding for healthcare, a lack of basic resources and political instability, which could negatively affect Myanmar's economy.
BMI has revised its forecast for health expenditure in Myanmar following the release of data by the World Health Organization (WHO). According to WHO data, Myanmar's health expenditure in 2012 reached MMK891.9bn (USD1.03bn) - slightly below our calculation of MMK984.6bn (USD1.14bn). However, as we expect the government will continue to invest in healthcare provision, we have upgraded our forecasts for Myanmar's health expenditure. Between 2013 and 2023, we project that this will grow at a local compound annual growth rate of 12.0% (9.3% in US dollar terms), reaching a value of MMK3,264.8bn (USD2.70bn) by the end of the forecast period.
|Myanmar Healthcare Expenditure Forecast (MMKbn)|
The key factor behind this upgrade is the increase in government health expenditure in 2012. According to data from the WHO, government health expenditure reached MMK213.2bn (USD250mn) in 2012, which was a 65.2% increase from 2011's figure of MMK129.1bn (USD160mn). BMI forecasts that government health expenditure will grow at a local CAGR of 19.3% between 2013 and 2023 - higher than the CAGR for overall health expenditure. Although a challenging undertaking, the government's aim to implement universal healthcare by 2030 will be positive for both the healthcare and pharmaceutical sector, as it will improve patients' access to healthcare over the longer term.  Some of the latest healthcare plans announced by the government include:
Deputy Minister of Finance Dr Maung Maung Tein stated that the government is working to launch a pilot run of its first health insurance service this year, and that there will be a study of insurance premiums and reimbursements.
Deputy Minister of Health Than Aung unveiled a four-year epilepsy project aiming to help 500,000 epilepsy patients.
The Ministry of Health increased its budget for tuberculosis care from MMK1.2bn (USD1.2mn) to MMK3.7bn (USD3.7mn). Myanmar is one of 27 countries with the highest number of drug-resistant tuberculosis cases.
Mainly An Out-Of-Pocket Market
Despite the sharp increase in government health expenditure, this still only represented 23.9% of total health expenditure in 2012. While we expect the government's share of the total to increase over time, out-of-pocket health expenditure will remain the key driver of overall health expenditure over the medium term. Consequently, pharmaceutical firms looking to target the Myanmar market should consider market access strategies that focus on consumers.
|Private > Government|
|Government And Private Health Expenditure (MMKbn)|
Current Political Environment Is Restricting Growth
More importantly, we highlight that despite increases in expenditure, Myanmar's healthcare sector is still in its nascent state due to decades of military rule, which have led to underfunding in the healthcare sector. In addition, frequent ethnic conflicts will hinder the country's economic development across the states and regions of Myanmar, negatively affecting funding for healthcare. We therefore maintain that while the country's large unmet medical needs will provide commercial opportunities for pharmaceutical firms, there needs to be a significant improvement in basic resources (infrastructure, personnel, utilities etc.) and political stability before we will see strong interest from foreign players.
BMI Political View: Myanmar's beleaguered and controversial national census underscores the country's extremely difficult political position despite the ongoing implementation of revolutionary reforms that began in 2011. That said, the chief risk to the reform process remains the general elections planned for 2015. While it is our core view that the government will manage these elections in a way that will not threaten the country's long-term economic outlook, political risks will nevertheless continue to play a prevalent role in our assessment of Myanmar's nascent economic transformation.
 Business Monitor International - Industry Trend Analysis - Implementation Remains Key To Realising Healthcare Ambitions - February 25 2014.