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Jordan Pharmaceuticals and Healthcare Report Q3 2011
Business Monitor International, June 2011, Pages: 97
The Jordan 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 Jordan's pharmaceuticals and healthcare industry.
The Analysts View: While Jordan represents a stable market, its modest per-capita spending on pharmaceuticals and a population size of just over 6mn continues to indicate limited commercial opportunities for drugmakers. Additionally, we believe the prospect of high commodity prices will continue to add to inflationary pressures in Jordan, one of the few regional markets reliant on oil imports, which will negatively affect the availability of out-of-pocket financing for healthcare and medicines as the government strives to pick up the slack in the face of rising costs of food imports. Additionally, with exports being the second largest contributor to the economy, the turmoil across the Middle East and North Africa (MENA) region could weigh on the country’s overall growth momentum.
Headline Expenditure Projections:
- Pharmaceuticals: JOD412mn (US$581mn) in 2010 to JOD455mn (US$643mn) in 2011; +10.6% in local currency terms and +10.6% in US dollar terms. Forecast up moderately from Q211 due to new import data and revised import reliance.
- Healthcare: JOD1.43bn (US$2.02bn) in 2010 to JOD1.57bn (US$2.20bn) in 2011; +9.7% in local currency terms and +9.7% in US dollar terms. Forecast up moderately from Q211 due to macroeconomic factors.
- Medical devices: JOD124mn (US$175mn) in 2010 to JOD134mn (US$189mn) in 2011; +8.1% in local currency terms and +8.1% in US dollar terms. Forecast up slightly from Q211 due to macroeconomic factors.
Business Environment Rating: Jordan’s composite score for Q311 stands at 47.2, a 2.2% drop on the previous quarter, but which again ranks the country 10th out of 19 markets surveyed in the Middle East and Africa (MEA) region. Jordan’s score is stronger on the risks side rather than in terms of its potential rewards, although even the former has recently been downgraded due to currency weakness. Furthermore, we maintain that the country's the already weak fiscal position will not allow the government the leeway to expand subsidies and keep up with rising global commodity prices, which may potentially require further cost-containment in other areas of public expenditure.
Key Trends & Developments
- In April 2011, leading Jordanian drugmaker Hikma agreed to acquire a minority interest in India's Unimark through the subscription of new equity for a cash consideration of US$33.3mn, in a deal expected to close in mid-May 2011, according to a company press release. Unimark is a privately held company and a leading Indian manufacturer of active pharmaceutical ingredients, with a broad product range including betalactams, cephalosporins, carbapenems and a number of therapeutic segments including cardiovascular, anti-asthma and anti-infectives.
- In January 2011, Jordan released the outline for its Executive Development Programme (EDP) for 2011-13, worth JOD6bn (US$8.4bn), which will be distributed throughout 24 different economic sectors. This is good news for potential investors, as much of the funding is aimed at improving the country's infrastructure, which in turn should boost employment and increase domestic demand for pharmaceuticals. The budget has assigned JOD519.8mn (US$732.6mn) to healthcare investment and JOD450mn (US$634.2mn) to higher education and scientific research.
The Analysts Economic View: The government is determined to offer further incentives to local firms in order to ensure longer-term sustainable growth, with such schemes also to impact healthcare and pharmaceutical industries. Prime Minister Marouf Bakhit announced in early March 2011 that a new law is being discussed which is aimed at limiting future incentives to value-added investments that employ Jordanians and use domestically-sourced raw materials. Trade Minister Hani Mulki also assured foreign investors that the new law will not affect them and that they will continue to receive the incentives offered by current law.
The Analysts Political View: In response to the eruption of small scale protests in the country, Jordanian King Abdullah has promised to do more for social development. This prompted him to take a more hands-on approach in early March 2011, visiting the poor Northern Mazar District and directing officials to implement development projects in health and education. The Jordanian king is seen by many as a benevolent and caring ruler and his direct involvement in these projects indicates that his strategy will be to prioritise such areas in order to ensure stability.
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