Abstract
BMI’s new Pharmaceutical & Healthcare Report for Q409 forecasts that the
value of the Jordanian drug
market will increase from around JOD263mn
(US$370mn) in 2008 to JOD369mn (US$519mn) by 2013.
This represents a
compound annual growth rate (CAGR) of around 7.0% (in both US dollar and
local
currency terms), which is broadly in line with the country’s
expected GDP development. The main
drivers of this pharmaceutical
expenditure growth include the planned expansion of health insurance
coverage, changing epidemiological profile (with a rising number of chronic
patients), the construction of
new healthcare facilities and the
strengthening of both intellectual property (IP) regulations and trade
relations.
In BMI’s Business Environment Ratings Table for Q409,
Jordan improved its position in the Middle East
and Africa region from
eighth to fifth, out of the 17 regional markets surveyed. However,
Jordan’s overall
drug market size is limited by its 6mn population;
the recently introduced unified purchasing system for
medicines used by
the public and military sectors and modest per capita spending on
pharmaceuticals.
Nevertheless, the country has considerable commercial
potential in regional terms, boosted by friendly
relations with the West
and growing Arab regional co-operation. An additional draw is the
authorities’
success in fighting counterfeiting. In fact, July 2009
local press reports indicated that the value of fake
drugs dropped from
JOD16mn in 2007 to just JOD1mn in 2008, as a result of improved monitoring
and
public awareness systems.
Around the same time, Jordanian
authorities were in the process of finalising a trade agreement with Iraq,
with the aim of exporting pharmaceuticals there. An increase in exports is
likely to benefit the country’s
major players most, especially
Hikma. However, around the same time, local news sources reported that
pharmaceutical exports from Jordan experienced a setback in Q109 compared with
Q108. Export
revenues were down by 22.6%, largely due to falling demand in
the US, although we expect drug exports
to recover in the coming years.
Indeed, intense competition among domestic generics firms and a small
domestic market is forcing many to look overseas to generate revenues, with
such processes encouraged
by the improvement of domestic IP
regulations.
In the retail pharmacy sector, one of the most recent trends
is the emergence of pharmaceutical franchises.
Pharmaserve is the first
such national group created by independent retail stores, which receive
logistical
support, including an electronic ordering system and inventory
management. Other developments include
the announced four-hour strike to
be staged by the Jordan Pharmacists Association (JPhA) in renewed
protest
against the 4% sales tax on medicines. The tax, which has been in place since
2002 for pharmacies
with a turnover of over JOD75,000 (US$105,000), will
reportedly lead to further price increases, thus
discouraging sales.
Nevertheless, the Sales Tax Law is unlikely to be scrapped, even though
the
government only receives around JOD4mn (US$5.6mn) per annum from the
levy that affects a third of
approximately 1,800 retail pharmacies in the
country.
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