KUALA LUMPUR: Malaysia’s healthcare sector is entering a pivotal phase of transformation as rising demand, an ageing population, and evolving patient needs continue to put pressure on the healthcare system.
Amid these challenges, however, new opportunities are being created across the domestic healthcare ecosystem.
Long waiting times and capacity constraints in the public healthcare system also continues to drive demand for private healthcare services that positioned the local private healthcare sector for robust growth, according to the 21st Bursa Malaysia-Hong Leong Investment Bank (HLIB) Stratum Focus Series, themed “Malaysia Healthcare Industry Moving Forward” held here yesterday.
The event, which was well attended by industry players, explored Malaysia’s healthcare outlook, the opportunities and challenges facing private healthcare providers, the performance of the healthcare travel industry, healthcare affordability and medical insurance, as well as the role of local pharmaceutical capabilities.
Head of healthcare and life sciences (advisory, Asia Pacific) at Frost & Sullivan, Rathanesh Ramasundram, told StarBiz that Malaysia’s healthcare infrastructure remains a key competitive strength, with its end-to-end patient experience setting it apart from regional peers.
“This includes a combination of the country’s high-quality clinical services, modern facilities and personalised care that continues to attract medical tourists.
“Concurrently, Malaysia offers treatment at relatively affordable prices compared with many regional markets.
“Combined with the country’s tourism appeal and multicultural environment, these factors continue to strengthen Malaysia’s position as a medical tourism destination,” he said on the sidelines of the event.
From a pharmaceutical standpoint, Pharmaniaga Bhd
managing director Datuk Zulkifli Jafar said medical tourism contributes meaningfully to its revenue mix, driven by rising demand for medicines from the private healthcare sector as the segment continues to expand.
“Medical tourists are primarily treated in private hospitals, which creates a positive spillover for the sector,” he added.
Thus, Zulkifli noted that initiatives such as AIA’s introduction of a “generic first” policy are encouraged to moderate the rising inflation.
BIMB Research, in its latest report on the sector, said Malaysia’s medical inflation has persisted at around 15%, well above headline inflation, while insurance and takaful claims have risen much faster than premiums.
“For hospitals, pressure is broad-based across staff costs, medical consumables and equipment prices, as well as utilities and depreciation from ongoing capacity expansion,” the research house said.
It also highlighted that insurers in turn responded more aggressively in scrutinising bills, negotiating rates and pushing for greater cost transparency.
Zulkifli pointed out: “As we move into the second half of financial year 2026 (2H26), that’s when higher production costs and supply chain disruptions are expected to filter through.
“Manufacturers are already facing higher input costs, and those pressures will increasingly be reflected across the industry.”
Therefore, the focus should be on manufacturing quality medicines locally at lower cost, helping to ease financial pressure on both the government and patients, he added.
Zulkifli also expects supply chain disruptions and higher raw material costs will continue to pressure manufacturers in 2H26, noting that Malaysia relies heavily on China and India for pharmaceutical inputs.
“While we may not be directly affected by geopolitical conflicts, global supply chains are interconnected, as disruptions elsewhere inevitably feed through into higher production and logistics costs.
“At this stage, we’re estimating cost increases of around 15% to 20%, as we monitor developments closely with the government through regular cost assessments,” he explained.
“Our objective is to help contain healthcare costs by producing affordable, high-quality medicines locally, ensuring our generic medicines deliver the same efficacy as originator products while helping reduce overall healthcare expenditure,” Zulkifli said.
Currently, imported medicines make up two-thirds of total supply, hence why Malaysia is susceptible to various supply and demand shocks.
“Our growth strategy is centred on higher-value generics and biopharmaceuticals.
“We have entered the insulin segment, and localising vaccines represent the next major growth opportunity.
“Several vaccines are currently in our pipeline, including PCV13, which we hope will receive regulatory approval by the end of the year or, at the latest, early next year,” Zulkifli told StarBiz.
“We are also expanding our portfolio of high-value generic medicines and participating more actively in government tenders while continuing to improve manufacturing efficiency,” he added.
However, he said the challenges facing medical manufacturers are largely cost-driven rather than structural.
“During 1H26, manufacturers were still drawing on existing buffer stocks, so the full impact of geopolitical tensions wasn’t immediately visible.”
“One strategy is forward purchasing to secure raw materials earlier and plan their production more efficiently which helps mitigate cost pressures while ensuring continuity of supply,” he pointed out.
Zulkifli also noted that the higher US tariffs on China could create opportunities for Malaysia.
“Some of our technology partners are looking to expand manufacturing in Malaysia because our tariff position is more competitive.
Meanwhile, chief executive officer of Galen Centre for Health and Social Policy, Azrul Mohd Khalib noted that insurance premiums have risen by as much as 200%, significantly exceeding the 70% increase reflected in Bank Negara Malaysia’s data chart.
He highlighted that out-of-pocket healthcare spending continues to rise as households increasingly rely on personal savings despite Malaysia’s tax-funded public healthcare system.
While insurance accounts for only about 8% of total healthcare financing, the bulk of healthcare spending still comes directly from households, he said.
According to Azrul, the underlying issue lies in the largely unregulated nature of insurance premium increases.
Another key factor is Malaysia’s ageing story with the population aged 65 and above already at 8% since 2025.
Rathanesh Ramasundram, Head of Healthcare & Life Sciences (Advisory, Apac) at Frost & Sullivan said
while an ageing population will boost long-term demand for aged and long-term care, workforce shortages remain a critical constraint.
“The public healthcare system continues to face doctor shortages, while the private sector is experiencing tighter supply of nurses,” she said.
She added workforce shortages are particularly acute in aged care services, where many nurses prefer to work in hospitals instead.
Nonetheless, she highlighted gradual steps to address the labour shortage concerns.
