We believe targeted focus on primary healthcare by government is a step in the right direction. We however believe implementation of the NHI in its current format, could potentially reduce the three listed private hospitals’ revenue by 64%. Bigger pharma retailers are more likely to survive but smaller independent pharmacies will struggle and this could lead to more consolidation in the pharmacy retail sector. We believe that a revision in the BEE codes could potentially be another form of funding the NHI but without a detailed roadmap of how government intends to fund the NHI, we believe the uncertainty may continue to weigh on the valuation ratings of companies in the healthcare sector.
