The population growth in the Philippines has increased demand for healthcare facilities and services. The government has increased funding for healthcare through new taxation and aims to upgrade facilities. Major healthcare providers plan to significantly expand their hospital networks and services over the next 3-5 years. This growing demand presents opportunities for solutions focused on areas like heart and cancer treatment, hospital waste management, emergency and operating rooms, and medical equipment. Consultancy services for measuring health outcomes and innovative wellness and elderly care technologies were also identified as relevant opportunities.

1. BO – Business Opportunity
Philippines – Health care
Tarja Kuokkanen
2/2016

2. Market Demand
Summary of discussions with the key market players (e.g. potential buyers,
market experts).
1. Change in the market which has opened up this opportunity
– In 2015, the population of the Philippines hit 101 million. The fast population growth is expected to
continue and the forecasts show a population of 150 million in 2050. Fast growth of the population has
put pressure on increasing the amount of health care facilities and to enhance the service level of the
existing ones. Still today, there is a severe shortage in the number of hospital beds per capita -
Philippines only having 1 bed per 1000 inhabitants compared to Finland’s 5 per capita, and WHO’s
recommendation of 3.3 per capita. The total expenditure on health per capita has gone up from USD 55
in 2006 to USD 122 in 2013.
– One major driver for the public health care sector has been Sin tax law, which was passed in December
2012. Sin tax law increased the taxation of tobacco products and alcohol. Out of the extra revenues
collected through sin tax, 85 percent are earmarked for health care to fund universal health care,
upgrade medical facilities, and train doctors and nurses. Within two years of passing the law, the
Department of Health’s budget increased from US$1.25 billion to nearly US$2 billion. For 2016, DOH
budget has been further increased to US$2.6 billion.
– Healthcare IT spending hit USD 52.4 million in 2015 and is expected to reach USD 60 million by 2019
with a compound annual growth rate of 4% in 2016-2019. Bulk of the spending is coming from the
healthcare providers including hospitals, equaling to 88 percent of the total pie. Hardware represents 79
percent of the spending, while services and software represent the remaining 21 percent. Most of the
spending is coming from the private sector driven partly by aims to promote Philippines as a hub for
medical tourism, while public sector still builds up its infrastructure in basic hardware.
– Medical equipment market is estimated to be around 600 milj USD and growing.
02/2016 © Finpro2

3. Market Demand
Summary of discussions with the key market players (e.g. potential buyers,
market experts).
2. Estimated volume of the demand, growth and time window
– Volume:
– Currently there are 1059 PhilHealth (national heath insurance program) accredited hospitals in the
Philippines.
– 675 hospitals are level 1, 273 level 2 and 111 level 3 hospitals
– Number of beds (2015): 89,653 in PhilHealth accredited hospitals (levels 1-3)
– Ratio: 1 hospital beds per 1,000 inhabitants
– Total number of healthcare facilities including infirmaries is 1847. Out of these roughly 60 percent are
private and 40 percent public.
– 721 health facilities are under the management of local government units (LGUs)
– 72 Department of Health (DOH) hospitals that treat patients with specific illnesses
– Severe shortage in hospital beds - according to WHO, sufficient number of hospital beds per 1000
inhabitants is 3.3
– Medical equipment exports from the EU to the Philippines amount to ca. US$ 220 million (2013, EU
Commission data). Unofficial estimates indicate the total market size to be around US$ 600 million in
2015.
02/2016 © Finpro3

4. Market Demand
Summary of discussions with the key market players (e.g. potential buyers,
market experts).
2. Estimated volume of the demand, growth and time window
– Growth: The demand to increase the amount of healthcare facilities is imminent.
• Several major local conglomerates have aggressive plans to expand their hospital portfolio. Ayala for example, is
looking to build ten new hospitals to offer healthcare within its communities and townships. They are also
expanding their clinic portfolio to add to their recent acquisition of a large pharmacy chain. Their plan is eventually
to be able to offer the full service to their customers – flow through clinic to hospital and to pharmacy
• Government has set a target to upgrade all Department of Health –controlled hospitals and has given an ultimatum
to private hospitals to incorporate ER and surgical expertise into their practices at the threat of being downgraded
to the status of a primary healthcare center.
– Time frame: The government effort to enhance the facilities are ongoing. Major conglomerates have
published their plans to significantly expand their healthcare interest within the coming 3-5 years.
02/2016 © Finpro4

5. Market Demand
Summary of discussions with the key market players (e.g. potential buyers,
market experts).
3. Which offerings (products, services, solutions) are relevant to this opportunity?
• New major hospital projects create opportunities on a wide scale from medical devices to waste and
linen treatment
• There is a demand especially for solutions focusing in heart and cancer treatments as well as hospital
waste water management
• Philippines renewed their classification system which led to many hospitals losing their hospital status.
To upgrade their status, they need to build operating and emergency rooms to their facilities. This
creates opportunities for suppliers involved in these areas.
• Rapid growth of medical tourism has created demand for high-end equipment
• Consultants are needed in measuring the health outcomes. No existing offering on the market
• Ayala group is looking to introduce innovative health related wearables to their 40 000 employees. After
initial testing, technologies would be packaged as a B2B service to their vast portfolio of corporate
tenants.
• Ayala is also looking into innovative and effective wellness solutions, like orthopedic solutions
• Opportunity to build an elderly care focused township or community raised interest during the meetings
with Ayala’s healthcare companies
02/2016 © Finpro5