The IMF reports that global economic activity is seeing “a broad based and sharper-than-expected slowdown, with inflation higher than seen in several decades”, mainly triggered by cost-of-living crises and tightening financial conditions in most regions, the invasion of Ukraine, and the slow transition of the Covid-19 pandemic to an endemic state.
GDP growth globally is expected to slow to 2.7% in 2023, down from 3.2% (expected) and 6.0% in 2022 and 2021 respectively. ASEAN Emerging markets are expected to fare better at 4.9% growth for 2023. Advanced Economies (the US, Euro Area, UK, Japan and Canada) may fare the worst at only 1.1% GDP growth forecast for 2023.
Conventional wisdom suggests that the healthcare sector will fare better than other sectors during an economic slowdown. This is likely especially so when it comes to specialised products and services that healthcare providers rely on, such as products for treating diseases such as cancer and services like genomic testing.
Malaysian Genomics Resource Centre (MGRC) is a specialised healthcare company. Its primary offerings are categorised into genomics (comprised of genome sequencing, bioinformatics analysis, and genetic screening services) and biopharmaceutical products (particularly immunotherapies comprised of CAR T-cell therapies for cancers and cell therapies for other clinical and non-clinical applications). The Company operates a high-throughput sequencing lab, an advanced microarray facility, and a rare state-of-the-art cell processing lab.
The Company’s genomics services are well established, and its cell processing lab can supply CAR T-cell therapy production services to hospitals in Malaysia and overseas at a fraction of the cost of the same therapies produced in Europe or the United States.
The CAR T-cell therapy market is projected to reach US$52 billion by 2028, growing at a CAGR of 64% from 2021 to 2028, driven by the rising incidence of cancer worldwide and the greater number of patients who fail to respond to the first- and second-line treatments including radiotherapy and chemotherapy. The genetic testing market is projected to reach US$36 billion by 2030, growing at a CAGR of 10% between 2022 and 2030, driven by the increasing incidence of chronic diseases (cancer, cardiovascular and metabolic diseases), and growing acceptance of tailored medications based on a patient’s genetic markers.
MGRC is well positioned to capitalise on the benefits of being an early mover in these specialised healthcare segments. It has been offering genomics services since 2004 and genetic testing services since 2012. In addition, it owns and operates one of the region’s only cell laboratories certified by a regulatory body (the National Pharmaceutical Regulatory Agency of Malaysia’s Ministry of Health) for the production of CAR T-cell therapies. It is also able to supply these specialised products at approximately 10% of the cost of the same therapies produced in Europe or the United States. This has caught the attention of clinical specialists and patients across ASEAN and as far away as the Middle East and Eastern Europe.
Over the past several months, MGRC has laid the groundwork for expanded access to its products and services in and outside Malaysia. This has included establishing supply and distribution agreements and exploratory collaboration agreements with Malaysia’s National Institutes of Health, Universiti Malaysia Sabah, MAHSA Health, UCrest Berhad, as well as partners in Thailand, Saudi Arabia, and the UAE. Some of these supply and distribution agreements have started to generate revenue. Similar contracts are currently being explored with distributors and partners in Vietnam, Indonesia, Cambodia and elsewhere.
At the same time, the Company has been working to further diversify its involvement within healthcare by looking for niche opportunities in downstream healthcare services. The first example of this is MGRC’s interest in Aquahealth Sdn Bhd, a kidney dialysis operator. The opportunity herein is to leverage the Company’s experience in genomics and bio-pharmaceuticals to deliver a wholistic, personalised kidney care model, eventually to be deployed through a network of dialysis centres across Malaysia.
So, to conclude:
The World may be looking to an extended downturn next year, but the healthcare segment, in general, is expected to be resilient. Within the healthcare segment, MGRC’s specialised products and services are likely to be even more resilient as (i) the demand for such services is growing strongly, driven by the increasing prevalence of NCDs, (ii) the growing number of patients not responding to current treatments, and (iii) the growing awareness and interest in immunotherapies and also genetic testing.
MGRC has started laying the foundation to expand its reach outside Malaysia to ASEAN and the Middle East North Africa region. Some of these efforts may take several months or more to come to fruition, but some have already started contributing to MGRC’s revenue. At the same time, the Company is looking for opportunities to secure a diverse portfolio of earnings accretive assets across Southeast Asia that can leverage and benefit from its genomics and biopharmaceutical knowledge and experience developed over the past 18 years.
MGRC offers investors access to a unique segment of the health market called Precision and Personalised Medicine, of which the high-growth subsegments of genomics and biopharmaceuticals are significant components.
With the above, and the continued commitment of the MGRC team to improve access for doctors and their patients to personalised and precision healthcare, the Company expects 2023 to be another strong growth year. As immunotherapies, including the use of CAR T-cell and other therapies, continue to gain traction in private and public healthcare worldwide, the demand for MGRC’s products and services will grow from year-to-year.
