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Qatar Pharmaceuticals and Healthcare Report Q4 2010
Business Monitor International, Sep 2010, Pages: 72
Qatar Pharmaceuticals and Healthcare Report provides industry professionals and strategists, corporate analysts, pharmaceutical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Qatar's pharmaceuticals and healthcare industry.
In the updated Q410 Business Environment Ratings (BER) for the Middle East and Africa (MEA) region, Qatar is placed 10th out of 19 countries. Globally, Qatar ranks 58th, out of the 77 countries surveyed in our ever-expanding pharmaceutical universe. On the Risks side, Qatar offers an attractive operating regime, in addition to a sound economic base and predictable policies. However, on the recently remodelled Rewards side, we judge Qatar to be more challenging, given its smaller and young population, which precludes higher rates of the use of pharmaceuticals and medical services in general. Nevertheless, we expect the compound annual growth rate (CAGR) of the overall market value to be a strong 10.01% over our five-year forecast period (local tender is pegged to the US dollar), reaching QAR1.37bn (US$375mn) in 2014, from the calculated QAR848mn (US$233mn) in 2009.
However, although pharmaceutical regulatory risk is low at present, we also caution that the government may be forced to take a less generous approach to reimbursement if oil revenues decline, especially in the aftermath of the creation of a new Supreme Council of Health, with powers to set prices for medical services and pharmaceuticals. Still, given the relative wealth of the country, spending by Qataris will continue to favour high-value drugs. Moreover, the prevalence of chronic ‘civilisation’ diseases such as diabetes and hypertension will also serve maintain demand for patented products, although patent expirations will hamper faster value development of the segment.
Economic fundamentals of Qatar are also solid, with the GDP expected to grow by 15% year-on-year (yo-y) in the course of 2010, backed up by relatively high oil and gas prices, thus allowing for an increase in fiscal expenditure. However, domestic consumption does not reveal a particularly bright outlook, which will also have a bearing on the usage of non-essential medical products and services. On a more positive note, international ratings agency Standard & Poor's (S&P) recently upgraded Qatar's longterm sovereign credit rating to AA, due to the government's solid fiscal and external balance sheets.
In the meantime, Qatar and the wider Gulf Cooperation Council (GCC) region will continue to attract healthcare investments as demand for medical services continues to grow. In fact, in line with our core view that emerging markets will drive industry growth, Qatar First Investment Bank (QFIB) and Dubai-based Ithmar Capital, a regional private equity firm, recently launched a new healthcare platform which will seek to capitalise on the extensive growth opportunities in the sector in the GCC. Ithmar Capital has taken an AED1bn (US$272.2mn) majority stake in Al Noor Medical Company in Abu Dhabi, a privately-run healthcare company that operates three hospitals, three clinics and 10 pharmacies, in order to create a regional healthcare services company. Similarly, Imad Ghandour, Executive Director of Gulf Capital, a leading alternative asset management company recently asserted that:
“Healthcare is the number one sector of interest for private equity firms in this region.'
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