“Medicine Price Control” Cripples Hospital’s Profit, 12% of LPH’s Profit Disappears

Nomura Securities has shown the data of how much the price control policy on medical supplies, services, and drugs will impact hospital stocks.

On January 9, 2019, the Central Committee on Prices of Goods and Services Price had approved a price control policy on medical supplies, services, and drugs which caused hospital stocks to face a huge and sudden selloff from investors.

BDMS closed at ฿22.70/share, plunged ฿2 or 8.10% with ฿6 billion in value.
BH closed at ฿176.00/share, sank ฿16.50 or 8.57% with ฿1 billion in value.
BCH closed at ฿15.80/share, fell ฿0.60 or 3.66% with ฿646 million in value.
CHG closed at ฿1.85/share, downed ฿0.06 or 3.14% with ฿206 million in value.
LPH closed at ฿5.55/share, skidded ฿0.05 or 0.89% with ฿4.6 million in value.
THG closed at ฿32.75/share, slid ฿0.25 or 0.76% with ฿69 million in value.
VIBHA closed at ฿1.99/share lost ฿0.03 or 1.49% with ฿5 million in value.

 

Nomura Securities has forecasted that hospital stocks will lose 5-12% of its profit when the price control policy comes into action.

Bangkok Dusit Medical Services Public Company Limited (BDMS)
BDMS has 2019F revenue at ฿83.2 billion. The hospital earns approximately 27-30% of its revenue from medicine, 21-23% from doctor fee, 10-15% from lab & medical supply, and 32-42% from operation cost. While BDMS’s 2019F net profit is ฿11.1 billion, the impact from price control policy would plunge 9% of its profit by estimation.

Bumrungrad Hospital Public Company Limited (BH)
BH has 2019F revenue at ฿19.6 billion. The hospital earns approximately 25-30% of its revenue from medicine, 22-25% from doctor fee, 13-15% from lab & medical supply, and 30-40% from operation cost. While BH’s 2019F net profit is ฿4.46 billion, the impact from price control policy would plunge 5% of its profit by estimation.

Bangkok Chain Hospital Public Company Limited (BCH)
BCH has 2019F revenue at ฿9.21 billion. The hospital earns approximately 15-20% of its revenue from medicine, 20-22% from doctor fee, 10-15% from lab & medical supply, and 43-55% from operation cost. While BCH’s 2019F net profit is ฿1.29 billion, the impact from price control policy would plunge 6% of its profit by estimation.

Chularat Hospital Public Company Limited (CHG)
CHG has 2019F revenue at ฿4.83 billion. The hospital earns approximately 15-20% of its revenue from medicine, 20-22% from doctor fee, 10-15% from lab & medical supply, and 43-55% from operation cost. While CHG’s 2019F net profit is ฿758 million, the impact from price control policy would plunge 5% of its profit by estimation.

Ladprao General Hospital Public Company Limited (LPH)
LPH has 2019F revenue at ฿1.76 billion. The hospital earns approximately 20-25% of its revenue from medicine, 20-22% from doctor fee, 10-15% from lab & medical supply, and 38-50% from operation cost. While LPH’s 2019F net profit is ฿145 million, the impact from price control policy would plunge 12% of its profit by estimation.

Thonburi Healthcare Group Public Company Limited (THG)
THG has 2019F revenue at ฿8.29 billion. The hospital earns approximately 20-23% of its revenue from medicine, 20-22% from doctor fee, 10-15% from lab & medical supply, and 40-50% from operation cost. While THG’s 2019F net profit is ฿734 million, the impact from price control policy would plunge 10% of its profit by estimation.

Vibhavadi Medical Center Public Company Limited (VIBHA)
VIBHA has 2019F revenue at ฿7.05 billion. The hospital earns approximately 25-30% of its revenue from medicine, 20-23% from doctor fee, 10-15% from lab & medical supply, and 32.45% from operation cost. While VIBHA ’s 2019F net profit is ฿973 million, the impact from price control policy would plunge 9% of its profit by estimation.