According to the International Monetary Fund, the cost of healthcare worldwide is going to increase significantly in the coming years as pharmaceutical companies develop drugs for new diseases.
According to IMF deputy managing director Min Zhu, reforming healthcare systems should be high on the list of priorities of governments as they continue to work on cutting deficits and debt.
“We enjoy a higher quality of healthcare today, but we have to find a way to finance it,” he states.
Spend and reform
According to the Office of National Statistics, in 2010 healthcare expenditure accounted for 9.7 per cent of GDP, falling from 9.8 per cent in 2009.
The report, however, noted: “Although healthcare expenditure fell as a percentage of GDP in 2010, this may be considered rather misleading due to the abnormally high increase in the healthcare expenditure share in GDP in the previous year.
“This was caused by GDP falling by 2.8 per cent and healthcare expenditure rising by 8.8 per cent in 2009. Since 2008, healthcare expenditure as a percentage of GDP in 2010 has still increased substantially.”
But as the population in the UK continues to live longer, the strain on the NHS will continue to increase. This could in turn increase opportunities in the private sector and will certainly give rise to strong growth potential for innovative drug developers, for example.
David Pinniger, investment manager at SVLS Managers, explains: “Ageing populations in developed economies and burgeoning middle classes in developing economies provide the demographic foundations for the long-term secular growth of the healthcare industry.
“The current economic climate characterised by austerity and low growth actually creates the ideal conditions for capturing the full value of medical innovation, as the providers of healthcare are being required to deliver greater quantities of healthcare with increasingly constrained resources.
“This pressure only increases the demand for, and value of, more effective new drugs, diagnostics and medical devices – the higher quality content that the biotechnology industry is increasingly delivering.”
This year has seen the biggest shake up of the UK’s National Health Service to date, with proposals to abolish primary care trusts and strategic health authorities.
Ultimately, the bill gives control over the NHS budget to doctors and nurses, cutting out an estimated £4.5bn of bureaucracy, according to the Conservative Party. It will also create the potential for competition and for services to be outsourced where it is more efficient to do so.
When presenting the bill to parliament, David Cameron said: “People claim that the NHS needs to deliver £20bn of efficiencies over the next few years.
