Boston, MA -- (ReleaseWire) -- 09/05/2012 -- BMI View: A large population and moderate macroeconomic growth should combine with the political will to increase public healthcare expenditure, which will drive pharmaceutical market growth in Egypt. However, recent events in the country - which can be described as a 'soft coup' by the military - cast doubt on whether there will be a transition of power away from the military and Hosni Mubarak's 'old guard'. If this fails to happen, then it seems possible that the largest growth driver for healthcare spending in the region could fail to materialise. We had forecast that the election of Mohammed Mursi as president would be good for healthcare spending in the country but potentially risky for drugmakers, as the Muslim Brotherhood (MB) candidate had promised to impose a cap on pharmaceutical prices.
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Headline Expenditure Projections
- Pharmaceuticals: EGP18.23bn (US$3.07bn) in 2011 to EGP20.46bn (US$3.82bn) in 2012; +12.3% in local currency terms and +10.3% in US dollar terms. The US dollar forecast is considerably up from Q312 due to new exchange rate calculations.
- Healthcare: EGP62.22bn (US$10.47bn) in 2011 to EGP69.92bn (US$11.56bn) in 2012; +12.4% in local currency terms and +10.4% in US dollar terms. The local currency forecast is broadly in line with Q312.
- Medical devices: EGP3.20bn (US$538mn) in 2011 to EGP3.66bn (US$604mn) in 2012; +14.3% in local currency terms and +12.3% in US dollar terms. The local currency forecast is broadly in line with Q312.
Risk/Reward Rating: In our latest Pharmaceutical Risk/Reward Ratings (RRRs) for the Middle East and Africa (MEA), Egypt ranks 11th, rising by two places since Q312. Egypt's score of 46.9 out of 100 is a quarter-on-quarter increase of about 3%, on account of an increase in its rewards component, though double-digit inflation levels must also be noted. Globally, Egypt is 56th out of 95 markets, between Kazakhstan above it and Morocco below.
Key Trends And Developments
- In June 2012, four Egyptian banks said they will participate in jointly extending an EGP1.5bn (US$248mn) loan facility to fund the public-private partnership (PPP) Healthcare Project, with the construction of a set of hospitals scheduled to start in January 2013. The PPP arrangement will run for 20 years and the division of responsibility will leave almost all clinical service provision to the public sector, with the private sector ensuring the facilities are in place instead can be conducted according to international trade laws.
BMI Economic View: Inflationary pressure in Egypt is set to build in H212, primarily as a result of further currency weakness and a likely hike to domestic energy prices. We forecast consumer price inflation reaching 12.0% by the end of the year, which will have a marked impact on the availability of healthcare finance, two-thirds of which is covered by private sources.
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