Abstract
Recent months have shown that Uzbekistan’s economy remains resilient if
not immune to the global
financial crisis. BMI is now forecasting 5.1%
real GDP growth for 2009, representing a significant
slowdown but far
short of a recession. We have trimmed our five-year forecast through 2013,
with a
predicted compound annual growth rate (CAGR) of 11.91% and total
market value expected to reach
US$557mn in final consumer prices.
Impressive growth rates continue to reflect growth from a low base,
increased demand and spending by a large and growing population, with
government playing a limited
and not always helpful role. Official
statistics remain questionable and a lack of transparency in
governance
means that it is difficult to evaluate the effectiveness of recent investments
in healthcare, in
particular outside of Tashkent.
While the overall
market dynamic remains positive in Uzbekistan, the market faces daunting
challenges.
Out-of-pocket spending is key to driving consumption, but the
sum is under pressure and severe
economic slowdowns in Russia and
Kazakhstan have sharply cut the flow of remittances from abroad,
incomes
remain under pressure. Inflation is expected to average 17.1% in 2009 although
BMI is
forecasting it will fall to 10.4% in 2010. Like other Central Asian
governments, Uzbekistan is seeking to
reduce its abject dependence on
imports while at the same time stoking regional exports, which is the
reason for an ongoing modernisation programme at the state-run Uzfarmsanoat
pharmaceutical holding
company.
In June 2009, the parliament passed
the first reading of legislation amending the current pharmaceutical
law,
as well as the country’s Criminal Code, to strengthen provisions against
counterfeit and poor quality
medicines. The legislation more clearly
defines the crime of trafficking fake drugs – by clearly defining
fake and substandard medicines – and foresees harsher punishments. The
moves appear to be a positive
step towards dealing with what local law
enforcement admits is an enormous problem, with fake versions
of both
generic and patented medicines flowing in from China, Russia, Ukraine and
elsewhere. In another
notable development, a new draft medical insurance
law encompassing both the mandatory and voluntary
medical insurance
sectors, is being prepared by the Ministry of Finance and appears to be aimed
at
modernising the ineffective current system put in place shortly after
independence.
Despite some encouraging legislative moves, there is little
prospect of major foreign by foreign
pharmaceutical manufacturers in the
current environment and in a marketplace characterised by
significant
long-term political and economic risk – Uzbekistan is ranked 19th out of
20 countries in BMI’s
Business Environment Rankings for Q409. More
characteristic are memorandums of understanding and
usually bilateral
discussions with foreign governments and trade groups about establishing
licensed or
joint manufacturing and technology transfer – such as a
pact signed with the Singapore Manufacturers
Association. Bigger deals
will await major improvements in the local operating environment, none of
which are in the offing anytime soon.
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