Analysts have downgraded the performance of SET-listed healthcare companies to neutral after the Commerce Ministry approved putting medical supplies and medical service charges on the state price control list.
The Commerce Ministry will forward a measure to control medicine prices and healthcare services for cabinet consideration on Jan 15.
Share prices of SET-listed healthcare companies dropped after the announcement of price controls for medicines and medical services, with the share price of Bumrungrad Hospital plunging 8.6% on Wednesday.
Share prices of SET-listed healthcare companies rebounded slightly yesterday.
KGI Securities analyst Parin Kitchatornpitak said the move is a negative development for the healthcare sector because it is unclear what measures will be launched later.
In KGI Securities' view, it's likely that private hospitals' earnings will be affected, with a negative short-term outlook anticipated.
"In our view, [Thai] private hospitals might be affected by this measure, considering their higher profitability than global peers," Mr Parin said. "They have a net margin of 12-20%, versus 5-10% for global players. We maintain a rating of neutral on Thailand's healthcare sector.
"We believe doctor fees would be the most difficult to control, as doctors play a key role in medical treatment. More importantly, controlling prices for imported drugs and good medical services will be highly discussed by the cabinet, given Thailand's ambition to become a medical hub."
Finansia Syrus Securities has downgraded its rating for the healthcare sector to neutral from overweight because it expects private hospitals' growth rate for aggregate normalised earnings to decrease to 11.1% year-on-year in 2019.
Such expectations come from last year's high-base performance, whereby aggregate normalised earnings are anticipated to expand by 15.9%, said Jitra Amornthum, head of research at Finansia Syrus Securities.
