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Kuwait Pharmaceuticals and Healthcare Report Q3 2011
Business Monitor International, June 2011, Pages: 91
Business Monitor International's Kuwait 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 Kuwait's pharmaceuticals and healthcare industry.
BMI View: Kuwait remains one of the most attractive regional markets for pharmaceutical investors. Its affluent population has traditionally had a preference for patented medicines, which comprise over 67% of the total market’s value. Epidemiological factors, particularly the rising prevalence of diabetes and similar chronic diseases, will continue to drive market growth. We expect the annual pharmaceutical values growth in Kuwait to outstrip that of inflation, indicating continued commercial opportunities for drugmakers.
Headline Expenditure Projections
- Pharmaceuticals: KWD259mn (US$905mn) in 2010 to KWD286mn (US$1.02bn) in 2011; +10.7% in local currency terms and +13.0% in US dollar terms. Forecast up moderately from Q211 due to macroeconomic factors.
- Healthcare: KWD834mn (US$2.92bn) in 2010 to KWD922mn (US$3.29bn) in 2011; +10.5% in local currency terms and +12.8% in US dollar terms. Forecast up moderately from Q211 due to macroeconomic factors.
- Medical devices: KWD84mn (US$294mn) in 2010 to KWD93mn (US$332mn) in 2011; +10.5% in local currency terms and +12.8% in US dollar terms. Forecast up moderately from Q211 due to macroeconomic factors.
Business Environment Rating: Kuwait again ranks second, out of the 19 key markets surveyed by our proprietary Business Environment Rating (BER) matrix for the Middle East and Africa (MEA). Its composite score is, however, some 1.6% lower than in the previous quarter, due to the downward adjustment of its country risk score, on the back of the political unrest in the region. Nevertheless, we expect Kuwait to remain highly placed in the regional matrix over the coming quarters, as it offers one of the best rewards profiles among its peers.
Key Trends & Developments
- In April 2011, the Kuwaiti Ministry of Health announced that it make health insurance for expatriates in the country compulsory. Local press has reported over the course of May 2011 that expatriates in Kuwait are worried about the proposed scheme, which would require them to pay KWD130 (US$473) for receiving treatment in three hospitals and 15 clinics. They are concerned about the financial implications of the health insurance scheme, in addition to a hike in food prices, fees at the private schools, rent and other expenses. However, the scheme does allow families to receive discounts for certain services.
- Kuwait's health ministry is set to provide free medical and consultation services to Bedouns, according to Assistant Undersecretary for Financial Affairs Mohammad Al-Azmi, cited by Al- Dar in March 2011. The ministry took the decision during a meeting with the chairman of the Central System for Remedying the Status of Illegal Residents (CSRSIR), Saleh Al-Fadhalah. Al- Azmi added that the ministry will implement the decision after obtaining approval from the cabinet. According to sources, the decision will allow the government to counter attacks on doctors and nurses in various hospitals and health centres.
- In March 2011, Kuwait called on the members of the Gulf Cooperation Council (GCC) to consider implementing a single cost, insurance and freight (CIF) charge for pharmaceuticals across the region. The move would standardise drug prices and would also be in line with BMI's view that the GCC will use its increased collective bargaining power to lower the purchasing prices for pharmaceuticals. However, given that most drugs purchased at retail prices in Kuwait are bought by expatriates – who are not covered by government insurance – the authorities may not feel the pressure to further reduce distribution mark-ups.
BMI Economic View: Private demand in Kuwait’s is strengthening, supported by its strong macroeconomic fundamentals. However, elevated oil prices will not feed through into the economy, with the population generally paying the break-even price for fuel. At the same time, Kuwait's native population have become so accustomed to the high living standards provided by their governments that they are disincentivised from matching the productivity of their foreign counterparts. However, their numbers are increasing: around 45% of the population is under 25 and it is unclear whether either the government or the private sector is equipped to provide jobs for them, let alone continue to provide high levels of government subsidies for pharmaceuticals and healthcare services. Nevertheless, the government has been expanding investment in healthcare facilities, although the onus is on secondary care.
BMI Political View: Despite expectations of strong economic growth in 2011, we stress that internal political issues could constrain the recovery. Although Kuwait remains among the few GCC states in which signs of social unrest are minimal, persistently high unemployment and the lack of political liberties among its population continue to act as risks to the country's political stability. Consequently, we hold to our view that the government will continue to subsidise the rising cost of foodstuffs, while other sources of public expenditure, such as healthcare, potentially coming in for reductions.
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