Jordan Pharmaceuticals and Healthcare Report Q3 2012

BMI View: The development of Jordan’s medical facilities and infrastructure, partly driven by the country’s aim to increase its attractiveness for medical tourists from across the globe, will provide solid longer-term commercial opportunities for companies involved in the field. However, makers of innovative medicines will continue to face market access barriers in the shape of unfavourable pricing and intellectual property (IP) regimes, while the authorities’ attempt to increase access to medicines is set to result in encouraging the use of cheaper generic medicines. Still, while we expect a decline in the patented drug market’s share of the total by value, the absolute value of the segment will increase.
Headline Expenditure Projections 􀂃 Pharmaceuticals: JOD463mn (US$653mn) in 2011 to JOD504mn (US$712mn) in 2012; +8.9% in local currency terms and +8.9% in US dollar terms. Forecast slightly up from Q212 due to new historical data.
􀂃 Healthcare: JOD1.71bn (US$2.41bn) in 2011 to JOD1.86bn (US$2.62bn) in 2012; +8.8% in local currency terms and +8.9% in US dollar terms. Forecast down from Q212 on account of macroeconomic factors.
􀂃 Medical devices: JOD112mn (US$158mn) in 2011 to JOD122mn (US$173mn) in 2012; +9.1% in local currency terms and +9.2% in US dollar terms. Forecast slightly down from Q212 because of exchange rate fluctuations.
Risk/Reward Rating: Jordan’s composite Pharmaceutical Risk/Reward Ratings (RRRs) score for Q312 is 51.4, 6.2% higher quarter-on-quarter (q-o-q) from Q212. The improved score places the country ninth out of the 30 markets surveyed in the Middle East and Africa (MEA) region. Nevertheless, Jordan’s rewards and risk scores remain relatively evenly balanced. Globally, Jordan is 49th out of the 95 markets surveyed by BMI, above Ukraine and below Argentina.
Key Trends And Developments 􀂃 In January 2012, Jordanian drugmaker Hikma Pharmaceuticals reached a partnership agreement with German company Ergomed. Ergomed will administer clinical trials of Hikma treatments during a pilot project in Jordan. Ergomed will carry out the first clinical trials for one of Hikma’s oncology products in hospitals, along with expansion plans in the Middle East and North Africa (MENA). Hikma will also offer Ergomed an extended insight into the local pharmaceutical sector.
􀂃 In March 2012, Hikma said it was targeting Turkey as its next area for its global expansion. In an interview in the Financial Times, the company said the acquisition of a pharmaceutical company in Turkey offered Hikma the chance to gain a toehold in a market already the size of its traditional focus. However, the Turkish market is likely to prove challenging over the coming years, as the government will continue to intervene in the market to reduce public expenditure.
􀂃 The Jordan Investment Board (JIB) bureau in Abu Dhabi has attracted investments worth JOD120mn (US$169.01mn) for Jordan’s healthcare, education and tourism sectors, the Jordan Times reported in March 2012. The efforts were directed towards establishing a hospital, an educational enterprise and a hotel, which will generate close to 500 jobs, the director of the JIB bureau, Adel al-Ali Zyoud, said.
􀂃 In the same month, the Private Hospitals Association (PHA) and the Jordan Hospitals Association cautioned that a rise in electricity tariffs will increase medical bills for patients. According to new rules, hospitals are required to pay JOD0.35 (US$0.49) per kilowatt hour (kWh) of electricity, while before the amendments they paid JOD0.09 (US$0.13) per kWh, PHA president Awni Bashir said. Bashir added that electricity bills used to account for 3% of a hospital’s annual expenditure but the contribution has increased to 15%.
BMI Economic View: Our downbeat outlook on the Jordanian economy has been reaffirmed by the latest industrial production data from the Department of Statistics, with the index pointing to an economy that is still in the grip of a broad-based slowdown. Moreover, sluggish growth is beginning to have an impact on prices, with the consumer price index (CPI), producer price index (PPI) and wholesale price index (WPI) all ticking lower in recent months. We retain our forecast for real GDP growth to slow to 2.4% in 2012, compared with an estimated 2.8% in 2011, and have revised down our forecast for average inflation from 4.0% to 3.5%.
BMI Political View: Although Jordan’s political risk profile has improved in recent months, we reiterate our view that long-term conflicts between the monarchy and the country’s Islamist movement, as well as between the monarchy and pro-democracy reformers, continue to raise political risks. We highlight increasing energy costs, the rise of political Islamism across the region and the conflict in Syria as three issues that could prompt a re-emergence of domestic unrest in 2012.