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Qatar Pharmaceuticals and Healthcare Report Q1 2012
Business Monitor International, Dec 2011, Pages: 80
Business Monitor International's 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.
BMI View: Qatar's attempt to introduce free market competition to its private drug distribution network has failed. Although the market would have eventually begun to correct prices according to the laws of competition, this did not happen fast enough and the rampant profiteering by distributors and retailers has forced the Supreme Council of Health (SCH) to backtrack and reintroduce price caps. This will dissuade new companies from entering the market and encourage pharmacists to continue prescribing expensive branded drugs.
Headline Expenditure Projections
- Pharmaceuticals: QAR1.16bn (US$319mn) in 2010 to QAR1.42bn (US$390mn) in 2011; +22.4% in local currency and US dollar terms. Forecast up from Q411 due to revised historic healthcare expenditure data and pharmaceutical price hikes.
- Healthcare: QAR9.70bn (US$2.66bn) in 2010 to QAR10.84bn (US$2.98bn) in 2011; +11.8% in local currency and US dollar terms. Forecast down from Q311 due to revised historic healthcare expenditure data.
- Medical devices: QAR615mn (US$169mn) in 2010 to QAR696mn (US$191mn) in 2011; +13.2% in local currency and US dollar terms. Forecast down from Q311 due to revised historic healthcare expenditure data.
Business Environment Rating: In BMI’s Q112 Business Environment Ratings (BERs) for the Middle East and Africa (MEA) region, Qatar is fifth out of 19 countries. The country has a favourable risk profile and has avoided political unrest that has affected the region. In the rewards category, Qatar scores close to the regional average. Per capita spending on pharmaceuticals is high, which makes up for a small overall market.
Key Trends & Developments
- In an effort to contain inflated pharmaceutical prices and profiteering by Qatar's small oligopoly of distributors, the SCH has reversed its decision to liberalise drug prices. The SCH has imposed a cap on the prices of 5,000 medicines, prohibiting distributors and retailers from making more than a 10% profit margin on drug prices.
- It looks likely that India will soon conclude talks with all the member states of the GCC to agree an FTA. These talks began officially in 2006 after the signing of the Framework Agreement on Economic Cooperation in 2004, which paved the way for the current negotiations.
BMI Economic View: A massive surge in the value of Qatar's hydrocarbon exports is set to leave the country's fiscal position in good shape heading into 2012. In spite of a significant ramping up of current expenditure - which we anticipate will lead to a 20.5% y-o-y increase in government spending through FY2011/12 (April-March) - we expect a 36.3% y-o-y rise in revenues to keep the budget firmly in the black going forward. We are forecasting a budget surplus of 7.4% of GDP in FY2011/12 (compared with 2.9% of GDP in FY2010/11) and do not expect the budget to fall into deficit until 2019. Though we caution that Doha's heavy dependence on hydrocarbon income leaves government coffers highly vulnerable to a sustained decline in global energy prices, we highlight that the country's US$60bn sovereign wealth fund reduces the implications of this risk, were a funding shortfall to emerge in the years ahead.
BMI Political View: Since the outbreak of the Arab Spring, Qatar has risen to prominence in international affairs as a result of its increasingly assertive and interventionist foreign policy. By offering financial aid to pro-reform movements in the region, by leading GCC and Arab League efforts to mediate ongoing conflicts and - in the case of Libya - by engaging in direct military intervention, the government has attempted to position itself as supportive of some degree of political reform across the Middle East and North Africa (though this has not extended to direct criticism of other regional monarchies).
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