Traditional healthcare models worldwide are undergoing fundamental changes which have accelerated since the COVID-19 pandemic. Sri Lanka is no exception when it comes to these ongoing changes in healthcare consumption, driven mainly by rising healthcare costs and government fiscal constraints.
Some of the key changes that we see in the Sri Lankan healthcare model are:
Increased demand for diagnostics: Similar to trends seen in other emerging markets, rising healthcare costs, limited access to healthcare resources and better health outcomes are compelling healthcare consumers to increase emphasis on preventive healthcare rather than treatment.
Higher uptake of telemedicine services: Supply side shortages, coupled with technological advances is driving increased adoption of telemedicine services. Although telemedicine adoption in Sri Lanka is at a nascent stage, we see strong growth in the space with startups such as oDoc leveraging the platform ecosystem model, to offer consumers a wide range of healthcare services.
Hospitals are shifting focus to diagnostics and inpatient offerings: Going forward, traditional healthcare providers will primarily compete by expanding their portfolio of diagnostics and specialised inpatient services. Telemedicine services will to some extent disrupt traditional outpatient demand however this will allow healthcare providers to increase inpatient volumes and maximise utilisation.
In the above backdrop, we see increased investment and consolidation in the private healthcare space over the medium term, with incumbent players looking to expand their diagnostics, telemedicine and inpatient offerings. Telemedicine startups with strong core users will be key acquisition targets.
ASIR is our key pick among the listed healthcare players; the group’s 1) recent capacity expansions, 2) strong footprint in diagnostics and emphasis on expanding its diagnostics offering, 3) ongoing additions to its inpatient portfolio (stem cell and IVF) 4) and membership within the SHL group, better positions ASIR to benefit from the evolving trends in the healthcare space compared to peers.