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Bahrain Pharmaceuticals and Healthcare Report Q2 2010
Business Monitor International, March 2010, Pages: 83
In 2009 Bahrain’s pharmaceutical market was worth only BHD43mn (US$112mn), but it is expected to grow to BHD45mn (US$120mn) in 2010, as the market recovers from the global economic slowdown. With private expenditure accounting for around half of total spending, the pharmaceutical market is sensitive to macroeconomic trends. Drug spending in 2009 was driven upwards by the outbreak of swine flu, which forced the government to spend an extra BHD5mn (US$13.2mn) on drugs. Other factors driving up drug expenditure include an expanding population (within 10 years the total population of the Gulf Cooperation Council (GCC) is expected to increase by a third to 53mn), increased consumption and the growing cost of medical imports. Growth should be comfortably above 4% in the 2010-2014 period. In the longer term, however, drug expenditure growth will slow, and will stand at 3.86% per annum in the 2014-2019 period, partly due to increased government cost-cutting as it tries to battle swelling health expenditure.
Health spending is Bahrain is being driven higher by chronic disease. The GCC nations have the highest obesity rates worldwide. Indeed, Bahrain has the sixth highest prevalence of obesity in the world at 28.9% of the population. This is partly due to poor diet but is also a result of the sedentary lifestyles that are a necessity in the country due to the scorching heat. According to a recent study by the health ministry, 94% of the population in Bahrain eat fast food an average of three times a week, while only 37% of the male population are deemed as being active. The knock-on effect of this obesity epidemic will be manifest in an increased prevalence of cardiovascular disease and diabetes.
In January 2010, the health minister of Bahrain stated that medicine prices in the country are among the lowest in the GCC region, with the exception of Saudi Arabia, where the large market permits cheap prices. Medicine prices are approved by the health minister, who in turn has stated that they cannot be brought lower than current levels. Suggestions for the establishment of a government-run pharmaceutical import firm or factories were also rebuffed, with the minister asserting that such a move would lead to subsidised drugs, which remain financially unfeasible. Despite the fact that medicine prices appear affordable in Bahrain, patients are still driving to Saudi Arabia to buy their prescription drugs, which can be up to 50% cheaper by comparison. To counter this, the Ministry of Health has proposed a plan to restrict profit margins on pharmaceuticals sold in pharmacies or other outlets to 45% to ensure prices are kept low, which could have an impact on overall market expenditure over the forecast period. In BMI’s Q210 Business Environment Ratings for the 17 countries of the MEA region, Bahrain has moved up one place to take fifth spot. This is despite the country’s overall pharmaceutical market rating dropping by 1.5 points. However, due to the precipitous drop from South Africa – falling 4 places and 4.5 points – Bahrain has managed to edge up in the rankings. The potential returns from the market are constrained by the island’s population of just 1mn. However, the low-risk economic and political climate and strong pharmaceutical-specific regulatory framework mean that Bahrain is one of the region’s most attractive markets in terms of the ‘risks to realisation of returns’ category.
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