Singapore’s Healthcare Industry: Gateway to ASEAN’s Healthcare Market

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Changi General Hospital, Singapore. (Photo: TODAYonline)

Singapore’s healthcare industry is recognized as among the best in the world, due to a combination of factors – strong regulatory governance, contributions from medical saving accounts, and a cost sharing system between the private and public sectors.

The government’s key strategies have been to transform the healthcare sector through IT-enabled systems, strong clinical research, improving long-term care, and moving towards sophisticated care.

Singapore thus serves as a showcase for new medical technology and healthcare delivery, attracting more than 500,000 medical tourists annually who account for just under four percent of overall tourism receipts (US$1 billion – Interestingly, 60 percent of these were Indonesian patients.

Foreign investors can use Singapore as a base to expand into the ever-developing healthcare markets in ASEAN. The country’s close proximity to the other members of the bloc as well as its transparent business environment and ease of doing business are just some of the factors that have convinced major healthcare providers, such as Siemens and Medtronics, to establish their regional HQs in Singapore.

Singapore’s success story

According to market insights firm Fitch Solutions, Singapore’s healthcare market is expected to grow to US$29 billion in 2020, a nine percent increase from the previous year, and could more than double to US$67 billion by 2029.

The hike is largely thanks to increasing government spending on healthcare, which is estimated at US$18 billion this year (or 5.9 percent of GDP) and will jump to US$50 billion by 2029. Further, more Singaporeans are using healthcare services, given its ageing population – 26.6 percent of the country’s population will be over the age of 65 in 2035.

Singapore, however, still spends less of its economy on healthcare than other major economies, such as the United States, which spends on average 17 percent of GDP (US$3.6 trillion) on healthcare annually. And yet, life expectancy at birth in Singapore is higher by two or three years compared to the UK and its infant mortality rates are among the lowest in the world, approximately half of that of Canada, the UK, and France.

Overview of Singapore’s universal healthcare system

Singapore’s universal healthcare program is funded by a multipayer system, comprising of tax revenues – which cover only one-fourth of the total healthcare costs – and payments from individuals and their employers through mandated life insurance schemes and deductions made to the compulsory savings plan, the Central Provident Fund. 

The healthcare system is centered around three programs, also known as the 3Ms:

MediSave – Singaporean citizens and permanent residents are obligated to contribute between eight to 10.5 percent of their monthly salary to their personal MediSave account. This can then be used to pay for the individual’s and their dependent’s medical bills. The dependent must also be a Singaporean citizen or a permanent resident to qualify.

MediShield Life – This is another mandatory healthcare program that provides basic protection for citizens and permanent residents. Medical treatments under this scheme is most suitable at public hospital B2 or C wards. If an individual wants to use a B1 or above ward in a public hospital, then they will need to pay a larger portion of the bill themselves.

For each person, they will receive an annual claim limit of S$100,000 (US$72,800) per year and there is no lifetime limit.

Medifund – The Medifund scheme is an endowment fund established by the government and serves as a safety net for citizens and permanent resident holders if they do not have enough funds in their MediSave and MediShield Life accounts.

Patients can get medical bills subsidized if they are treated at public hospitals with wards that have fewer amenities. Patients, for instance, that are admitted to C-class wards (a room with eight beds) can get a subsidy of up to 80 percent of their medical bills.

Pharmaceutical and biomedical industries: Leading drivers of economic growth

Singapore’s pharmaceutical and biomedical sectors are fast-becoming leading drivers of economic growth not only for the country’s healthcare industry but also its manufacturing sector.

The country’s deep base of skilled talents, pro-business environment, infrastructure, and thriving research and development landscape has attracted some of the largest pharma firms in the world. This has resulted in Singapore being one of the few countries that are able to export more pharmaceutical products (approx. US$8.1 billion in 2019) than it imports (US$3.19 billion in 2019).

There are currently more than 50 manufacturing facilities in the country, with eight of the world’s ten largest pharmaceutical firms owning plants in Singapore. Some of the major players include Abbott, GlaxoSmithKline, Novartis, and Pfizer, who account for more than 40 percent of Singapore’s regional market.         

Since the onset of the COVID-19 pandemic, there has been an increase in demand for emergency and intensive-care use drugs, such as antibiotics and anesthesia products, with Europe, the US, and Japan being the largest export markets for Singapore in the first half of 2020.

Research and development

Singapore’s multidisciplinary and interdisciplinary approach has made the country a hub for biomedical research and development (R&D) in Asia with employment in the biomedical sector doubling in the past decade (more than 24,000 people in 2019 or 20 percent of the manufacturing sector).

The country has been able to draw internationally renowned scientists as well as foreign students. The National University of Singapore (NUS) and Nanyang Technological University (NTU) are consistently ranked among the world’s top universities.

The government pledged some S$19 billion (US$13 billion) for research and innovation for the 2016-2020 period, which includes S$13.5 billion (US$9.8 billion) for science and technology.

There are currently over 50 Singapore-incorporated companies in the field of biomedical sciences R&D, who frequently collaborate with local and international research institutes. The R&D industry has thus the immense potential for rapid growth and foreign investment.

The city-state’s biomedical research centers include:

  • Singapore Institute for Clinical Sciences;
  • Institute of Bioengineering & Nanotechnology;
  • Institute of Molecular and Cell Biology;
  • Institute of Bioengineering & Nanotechnology;
  • Genome Institute of Singapore; and
  • Bioinformatics Institute.

Medical devices

Singapore’s medical devices industry is expected to be worth US$1.3 billion by 2022 due to increasing government spending, an ageing local population, as well as demand from the region.

More than 60 multinational medical technology (medtech) companies leverage the country’s strong engineering capabilities and high-quality assurance to manufacturing high-value products, ranging from life science instruments to contact lenses. In addition, some 60 percent of the world’s microarrays and one-third of the world’s mass spectrometers are manufactured in Singapore.

Investors are attracted by Singapore’s strong base for research and innovation that help medtech firms in designing new business models in healthcare, such as the use of big data to provide better patient-centric care. This, in-turn, provides medtech companies with the capabilities to export their products or services to go-to-markets in ASEAN as well as Asia.

Another advantageous factor for international investors is its intellectual property laws, which are among the strongest in Asia.

The Intellectual Property Office of Singapore (IPOS), a government agency under the Ministry of Law, launched the world’s first trademark registration mobile app in 2019, reducing the time to file a trademark by 80 percent. Moreover, the agency also launched the SG Patent Fast Track Program in May 2020, which aims to approve patent applications in as quickly as six months.

Medical tourism

Singapore attracts some 500,000 medical tourists annually who contribute more than US$1 billion to the economy. Approximately 60 percent of these visitors are from Indonesia.

The country, however, is struggling to hold on to its market share as Malaysia and Thailand offer cheaper healthcare services. Bypass surgery in Malaysia costs US$14,000 in 2019 compared to US$23,000 in Singapore in the same year. There is also a heavier cost burden on the city-state’s healthcare providers that is transferred to patients as the wages of doctors and nurses are the highest in ASEAN.

Despite facing increasing competition, Singapore will continue to be the preferred destination in specialized areas of medicine such as oncology, organ transplants, orthopedics, cardiology, and neurology, among others. In addition, many healthcare providers have sought to diversify their operations in recent years by investing their presence overseas, in particular, the large market of Indonesia.

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