,Singapore

This is the biggest threat to Singapore's healthcare sector in 2013

Will companies survive the blow?

According to OCBC, they see rising cost pressures as the main risk for the healthcare sector, as some of the healthcare companies recorded higher operating expenses as a percentage of revenue for 1QCY13. 

This was due largely to an increase in staff and rental costs. Hence we expect companies to strive to grow their revenues further in order to drive their operating leverage. 

Here's more from OCBC:

Healthcare companies have also largely embarked on expansionary plans to capitalise on the still-robust industry fundamentals. For example, Q & M Dental is seeking to widen its network of dental clinics in Singapore, with a target to achieve 60 dental outlets in Singapore by 2015, subject to economic conditions.

It also recently acquired its first general practice medical clinic as a means of diversifying beyond its core dental practice. 

RMG highlighted that it will begin the construction of its Raffles Hospital extension this year to expand its capacity. IHH also has a strong pipeline of hospitals which are under construction, with the bulk of them located in Malaysia and Turkey. In our opinion, these plans augur well for the medium-to-long term, but there will likely be some initial start-up costs which may impact near-term margins. 

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