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Jordan Pharmaceuticals and Healthcare Report Q4 2011
Business Monitor International, Sep 2011, Pages: 95
Business Monitor International's 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.
BMI View: Recent pro-democracy protests in Jordan have hit the country’s growing and economically important medical tourism business. The medical tourism industry is especially important since it accounts for over 4% of GDP and 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 drug-makers. With Jordan heavily reliant on imports of pharmaceuticals and oil it will be affected by unrest within the MENA region, even if it escapes further protests. The drop in medical tourism could have longer-term impacts if this slip allows other regional private healthcare destinations to gain market share. The country can ill afford this drop in revenue as its fiscal deficit has already been stretched to appease domestic pro-democracy protesters.
Headline Expenditure Projections
- Pharmaceuticals: JOD412mn (US$581mn) in 2010 to JOD455mn (US$642mn) in 2011; +10.5% in local currency terms and +10.5% in US dollar terms. Dollar forecast up very slightly from Q311 due to revised exchange rate forecast.
- Healthcare: JOD1.46bn (US$2.06bn) in 2010 to JOD1.59bn (US$2.24bn) in 2011; +8.6% in local currency terms and +8.6% in US dollar terms. Forecast up moderately from Q311 due to macroeconomic factors.
- Medical devices: JOD124mn (US$175mn) in 2010 to JOD135mn (US$191mn) in 2011; +9.2% in local currency terms and +9.2% in US dollar terms. Forecast up slightly from Q311 due to macroeconomic factors.
Business Environment Rating (BER): Jordan’s composite BER score for Q411 stands at 51.3, an 8.7% rise on the previous quarter, which means that the country rises to ninth of the 19 markets surveyed in the Middle East and Africa (MEA) region from 10th in the previous quarter. 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, BMI 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
-Hikma recently acquired multinational drugmaker Baxter Healthcare's US multi-source generic injectables (genectables) for US$112mn, catapulting the Jordanian drugmaker from the tenth to the second largest injectables supplier in the US drug market, with a 15% market share. The business will be integrated into West-Ward Pharmaceuticals, Hikma’s existing US operation.
- In April 2011, 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.
-Between January 19 2011 and March 16 2011, Hikma Pharmaceuticals’ share price dropped by 22.7% from GBP900 to GBP695 as a result of a loss of investor confidence as a result of unrest across Tunisia, Egypt, Libya and other markets across the region
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BMI Economic View: The government is looking to increase spending. However, exports are the second largest contributor to the economy and therefore any further turmoil could weigh on growth. This would also affect Jordan’s attractiveness compared with other local markets. In an effort to stimulate local demand the government is looking to increase household income. Further incentives will be offered to local firms in order to ensure longer-term sustainable growth. Prime Minister Marouf Bakhit announced in early March that a new law is being discussed, aiming to limit the incentives in the future to valueadded 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 in current law.
BMI Political View: In response to pro-democracy protesters, Jordanian King Abdullah has said that the country's next cabinet will be formed by an elected parliamentary majority. While this is a significant move towards democracy, the time required for these changes may still be too lengthy for some protestors. The US$400mn grant Saudi Arabia offered Jordan in early June suggests that Riyadh will attempt to bring Amman closer to its political orbit, which may slow the move towards democracy given fears that alignment with Jordan may stimulate protests within Saudi Arabia itself.
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