Abstract
In the BMI Business Environment Ranking for Q309, Zimbabwe remains firmly at
the bottom of the
matrix, which ranks 17 key markets surveyed in the
Middle East and Africa (MEA) region, as well as
globally. Zimbabwe’s
position is expected to show little improvement over the coming months, as
the
government continues to struggle with economic and political issues,
which have sidelined health in the
past to an alarming degree. The
country’s appalling health status has been exacerbated by the recent
outbreak of cholera, which threatens to reappear due to catastrophically
inadequate sanitation and water
treatment facilities. BMI notes that
Zimbabwe’s misguided governance has contributed to the scale of this
disaster, and has exposed the country as almost entirely reliant on
international aid.
Given the dire economic situation in the country, which
had been worsened by the staggering inflation
rate, the government
recently took local tender out of circulation and began using US dollars
for
commercial transactions. The decision has already eased inflationary
pressures dramatically, but is
unlikely to improve the situation of the
majority of small businesses and individuals significantly, given
the
scarcity of foreign currency in the country, and the lack of viable export
commodities. Additionally,
although the new finance minister put together
a short-term recovery plan, some US$5bn is needed in
total, including
US$2bn in donor funding. Nevertheless, in our view, the plan is a
well-conceived
document, with an honest sector by sector assessment of
conditions and costs for essential investments in
areas such as health and
fuel. However, the unpredictable political situation remains a major obstacle
to
international involvement.
Zimbabwe’s recent dollarisation
makes pharmaceutical market valuations somewhat less complicated.
However,
the overall picture is still far from clear, due to several factors, including
the lack of proper
distinction between prescription and over-the-counter
(OTC) products, the authorities’ failure to keep
proper records,
rampant counterfeiting, and the fact that much of the demand for essential
medicines is
met through donations by foreign companies and aid
organisations. Nevertheless, we are forecasting that
the Zimbabwe’s
pharmaceutical market will increase a compound annual growth rate (CAGR) of
3.0%
through to 2013. From a value of US$8.0mn in 2008, we expect that the
market will be worth just over
US$9.3mn at consumer prices in 2013, with
OTCs – especially analgesics – gaining ground at the
expense
of prescription-only medicines.
In terms of market split between generics
and patented products, the epidemiological profile of Zimbabwe
and the
need to treat huge numbers of HIV/AIDS patients will conspire to marginalise
generics in terms
of share of the total, which will remain at around 5%
throughout the forecast period. If the government
decides to prioritise
healthcare, drug prices could also take a hit, especially in the face of
Zimbabwe’s
large proportion of no- or low-income population, which
will all work against the faster development of
the overall pharmaceutical
market values, providing – of course – that dollarisation meets
its target.
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