Zimbabwe Pharmaceuticals and Healthcare Report Q4 2012

Includes 3 FREE quarterly updates

BMI View: Regardless of the outcome of the upcoming general elections, scheduled for November 2012, we remain pessimistic about the short- to medium-term development of Zimbabwe’s pharmaceutical market. While the need for medicines is vast, the majority of demand continues to be met through foreign donations, indicating the dire situation in the country. At the same time, the domestic industry continues to struggle, without much hope for government finances or credit extensions, which will continue to exacerbate the already massive problems with regard to access to medicines.

Headline Expenditure Projections

• Pharmaceuticals: US$160mn in 2011 to US$180mn in 2012; +12.7% in US dollar terms. Forecast in line with Q312.
• Healthcare US$833mn in 2011 to US$919mn in 2012; +10.3% in US dollar terms. Forecast unchanged from Q312.
• Medical devices: US$44mn in 2011 to US$49mn in 2012; +10.4% in US dollar terms. Forecast unchanged from Q312.

Risk/Reward Rating: In BMI’s Pharmaceutical Risk/Rewards Ratings (RRRs) table for Q412, Zimbabwe’s score is an unchanged 30.1, which again ranks the country 28th of the 30 markets surveyed in the Middle East and Africa (MEA). Zimbabwe will remain one of the least attractive pharmaceutical and healthcare markets regionally and globally (currently ranking 93rd out of 95 countries surveyed) on account of the elevated political, economic and social risks, as well as the lack of finances for adequate healthcare provision and capacity utilisation.

Key Trends And Developments

• In June 2012, the Japanese government funded a week-long immunisation programme in Zimbabwe which aimed to vaccinate 2mn children against polio and measles, as well as provide vitamin A supplements. The campaign is part of Zimbabwe's attempts to reduce child mortality in the country. The Japanese government offered the financial assistance to UNICEF rather than to the Zimbabwean government, over fears of corruption. UNICEF, via support from Japan and the Zimbabwean Ministry of Health, has managed to increase access to measles and polio vaccines, injections and safety materials, said UNICEF chief of health Peter Salama.
• The Health Transition Fund, established by Zimbabwean Prime Minister Morgan Tsvangirai in 2011, is showing positive results as partners have released money to reduce the number of maternal deaths. The fund was launched to raise more than US$400mn by 2016 and raised US$45mn in 2012, with the total budget for the year being US$69mn, said Gerald Gwinji, permanent secretary at the health ministry. The remaining amount will be made available after the programme achieves its targets, Gwinji added.

BMI Economic View: We maintain our view that prices in Zimbabwe will rise over the course of 2012 and have made a slight upward revision to our year-end forecast (to 7.4%, from 7.0% previously) due to an upward adjustment to our global oil price forecasts. Tight liquidity and a weaker rand will limit inflationary pressures, however, although the Zimbabwe National Statistical Agency has reported a slight easing in headline consumer inflation, to 4.02% year-on-year (y-o-y) in May 2012, compared with 4.03% in April. Inflation was at 0.07% on a monthly basis in May, compared with 0.19% in April. Over the longer term, the trajectory of inflation will depend on how long foreign currency is used as legal tender and whether the authorities are successful at attracting foreign investment and lending.

BMI Political View: Zimbabwe has moved a step closer to legislative and presidential elections after the finalised version of a draft constitution was released by a constitutional drafting committee. Although this is a positive step, there are still risks that President Mugabe's ZANU-PF party forces early elections. The threat of violence and a refusal by security chiefs to accept anything but a ZANU-PF victory at a vote, regardless of when it takes place, also remains.