Abstract
There are some green shoots of hope appearing in the wreckage of
Zimbabwe’s healthcare sector, as a
number of foreign companies are
considering re-investing in the country. Foreign drugmakers have
previously refrained from supplying medicines to Zimbabwe due to widespread
political unrest coupled
with the deteriorating economic crisis. The 2008
cholera outbreak highlighted the failings and collapse of
the healthcare
system, with over 4,000 deaths as a result of the treatable condition.
Consequently, BMI
estimated that the overall pharmaceutical market was
worth US40.8mn in 2008. However, by 2013 the
market will have contracted
to a value of US$0.46mn, representing a compound annual growth rate
(CAGR)
of -10.33%.
However, the appointment of Morgan Tsvangirai as Prime
Minister suggests that there has been a slight
thaw in the political
situation which could result in greater funds being made available for the
health
services. BMI believes that the events of May 2009 – when the
World Bank resumed financial assistance
to the country for the first since
2000 – dramatically improved prospects for foreign direct investment
(FDI) in the country. London-listed investment house LonZim, which focuses its
interests in Zimbabwe
and Mozambique, has subsequently announced that it
plans to establish a new firm that will import and
distribute
pharmaceuticals to Zimbabwe. Although the size of the investment is only
small, BMI believes
that multinational drugmakers including
GlaxoSmithKline (GSK), which previously had a presence in
the country
through sales, will have renewed incentives to export drugs through the
independent firm set
up by LonZim.
A renewed optimism also seems to
have infected Zimbabwean pharmaceutical manufacturer Caps
Holdings. In May
2009, the company revealed that it is ready for expansion into South Africa
through the
planned acquisition of an unnamed drug firm. The firm plans to
obtain sufficient funds to purchase
controlling stakes in a South African
drugmaker by listing its shares on the Johannesburg Stock Exchange
Pan
African Board (JSE PAB). The JSE PAB allows other African and international
firms domiciled in
the continent to list, thereby creating a mature equity
market. By also listing on this exchange, Caps will
be able to sell shares
and raise capital to acquire the South African firm.
However, the latest
quarter has also provided plenty of evidence to suggest that domestic
pharmaceutical
production in Zimbabwe remains as arduous as ever. In July
2009, it was reported that frequent power
cuts were forcing Bulawayo-based
Datlabs to throw away large quantities of drugs. CEO Todd Moyo has
claimed
that when there are sudden energy shortages, the company does its best to
sterilise the chemicals
being manufactured, but is regularly forced to
discard the half-finished products. As a result Datlabs has
asked the
Zimbabwe Electricity Supply Authority (ZESA) to provide it with advance notice
when the
power is going to be shut off. According to Moyo, this would
significantly minimise Datlab’s production
costs.
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