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Iran Pharmaceuticals and Healthcare Report Q1 2012
Business Monitor International, Nov 2011, Pages: 94
Business Monitor International's Iran 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 Iran's pharmaceuticals and healthcare industry.
BMI View:
Iran remains a very risky pharmaceutical market, not least due to its unsettled political situation. Theoretically speaking, however, it boasts a strong growth potential, propped up by the large population, which is forecast to reach nearly 79mn in 2016, and the reliance on imports for high-tech products. The government's fiscal spending will need to be reduced over the medium term, which will also weigh down on healthcare funding, given than it is responsible for about 45% of the total and some critics argue that co-payment levels are out of reach for some patients.
Headline Expenditure Projections:
- Pharmaceuticals: IRR29,783bn (US$2.90bn) in 2010 to IRR34,562bn (US$3.26bn) in 2011; +16.0% in local currency terms and +12.2% in US dollar terms. Annual US dollar forecast increased due to exchange rate considerations.
- Healthcare: IRR292,954bn (US$28.57bn) in 2010 to IRR337,975bn (US$31.88bn) in 2011; +15.4% in local currency terms and +11.6% in US dollar terms. Local currency forecast down marginally from Q411 due to macroeconomic factors.
- Medical devices: IRR8,304bn (US$810mn) in 2010 to IRR9,554bn (US$901mn) in 2011; +15.1% in local currency terms and +11.3% in US dollar terms. Forecast down significantly from Q411 due to macroeconomic factors.
Business Environment Rating:
In BMI's regional Pharmaceutical and Healthcare Business Environment Ratings (BERs) for Q112, Iran dropped two places to 16th out of the 30 countries surveyed in the Middle East and Africa (MEA) region, despite a relatively stable composite score. The lower ranking for the quarter is due to the addition of Namibia and the relative improvement of Iraq's score, which lifted it above Iran. Iran benefits from a large and growing population and relatively widespread access to healthcare services. However, its regulatory regime and political situation are highly questionable, which combines to create a low score for the risk variable.
Key Trends And Developments:
- In September, President Mahmoud Ahmadinejad emphasised the high potential of natural herbs for the treatment of different diseases, seeking a revival of traditional medicine during a meeting with World Health Organization (WHO) regional director Hassan Abdolrazzaq Jazzayeri. Ahmadinejad said the country may have to import more drugs and medicines unless traditional medicines are revived. Iran's geographical diversity offers favourable conditions for the growth of more than 7,500 species of plants, including 1,800 medicinal plants, according to reports by Fars News Agency.
- Arsalan Azhari, a minister from Kurdistan's department of planning affairs, said in September that Iran is ready to supply medical equipment to neighbouring states and that it has planned for an increase in medical tourism and sanitation services in Iraqi Kurdistan. Azhari said multiple memorandums of understanding (MoUs) have been signed between officials on both sides. I
- The Iranian government plans to export medical radioisotopes to other countries in the region, the director of the Atomic Energy Organisation (IAEO), Abbasi Davani, said in September.
BMI Economic View:
The country's lacklustre growth prospects are also weighing on the currency's bleak outlook. BMI forecasts the Iranian economy to expand by 2.1% and 2.2% year-on-year (y-o-y) respectively in FY2011/2012 and FY2012/2013, down from BMI's original forecasts of 2.3% and 2.5%, weighed down largely by the effect of subsidy phase-outs and international sanctions. While elevated international energy prices have provided windfall revenue for Tehran to allocate to investment projects, fiscal revenue will likely slow over the medium term as oil prices and export volume declines. BMI also expects the Iranian rial to continue depreciating against the US dollar, making imported medicines more expensive.
BMI Political View:
With international sanctions in full effect, many foreign firms have reduced their exposure to Iran to avoid being targeted. The US' accusations that Iran plotted to assassinate the Saudi Arabian ambassador to the US on American soil was a major factor worsening the already strained relationship between Washington and Tehran, and between Tehran and Riyadh. Although BMI does not believe military retaliation is imminent, the tension will discourage foreign involvement in the country.
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