2013-02-03 08:24:03 - New Healthcare research report from Business Monitor International is now available from Fast Market Research
BMI View: We caution that our forecasts for the Iranian pharmaceutical market are at considerable risk due to runaway inflation and political risks. We also point out that the official exchange rate does not follow the trends in the black market, which further distorts market valuations. While our local currency forecast for the market's development is broadly in line with the previous quarter's figure, the value in US dollar terms will be considerably impacted by rising inflation, caused by the sanction induced currency crisis. At the same time, we expect that the volume of pharmaceutical sales in the country will continue to be negatively impacted by the prevailing economic and political conditions. These have already resulted in shortages of certain
medicines, on account of the inability of local stakeholders to actually pay for them, given that Iranian banks have been blacklisted. Therefore, despite the country's demography-based long-term potential as a pharmaceutical market, its development clearly remains uncertain for the time being, and dependent on the eventual resolution of the crisis.
Full Report Details at
- www.fastmr.com/prod/529384_iran_pharmaceuticals_healthcare_repor ..
Headline Expenditure Projections
* Pharmaceuticals: IRR52,127bn (US$1.04bn) in 2012 to IRR55,606bn (US$0.79bn) in 2013; +6.7% in local currency terms and -23.8% in US dollar terms. US dollar forecast lowered considerably from Q412 due to rampant inflation in Iran.
* Healthcare: IRR298,573 (US$28.04bn) in 2012 to IRR387,824 (US$29.61bn) in 2013; -10.4% in local currency terms and +5.1% in US dollar terms. Local currency forecast lowered considerably from Q412 due changes in macroeconomic conditions.
* Medical devices: IRR14,296bn (US$1.09bn) in 2012 to IRR11,862 (US$0.71); -17.0%% in local currency terms and -35.2% in US dollar terms. US dollar forecast lowered considerably from Q412 due to rampant inflation in Iran.
Risk/Reward Rating: In BMI's regional Pharmaceutical Risk/Reward Ratings (RRRs) for Q113, Iran's unchanged score of 45.5 out of the maximum 100 points ranks it 15th again out of the 30 countries surveyed in the Middle East and Africa (MEA). Despite the longer-term potential provided by its large and youthful population, Iran will continue to be a challenging market from the operational point of view, as illustrated by its low industry risk score, which is one of the lowest in the table.
Key Trends And Developments
* Iran will set up a pharmaceutical plant in Indonesia in the near future, IRNA reported in September 2012. According to the Indonesian chairman of Iran-Indonesia Parliamentary Friendship Group, Ahmad Shahab, the Ministry of Health had requested the plant. He was speaking at a meeting with several officials from the Iranian health ministry. Shahad also highlighted the need to work on the memorandum of understanding (MoU) signed between the countries five years ago.
* Iran is projected to export pharmaceutical products worth about US$400mn during FY12/13, reports IRNA News Agency, citing the country's health minister Marzieh Vahid-Dastjerdi. While the Iranian pharmaceutical industry exported products amounting to about US$114mn in FY11/12, drugs worth about US$1bn were imported during the period. A plan proposed to the government of Iran also projected annual exports of about US$70bn if each of the 140 drug manufacturing units in the country were to export products costing US$500mn.
* Iran is facing a shortage of cancer and multiple sclerosis (MS) drugs due to sanctions imposed by the EU and US, the head of the Charity Foundation for Special Diseases, Fatemeh Hashemi, stated in October 2012. Patients suffering from thalassemia and dialysis are also facing problems, Hashemi told Tabnak news agency, adding that sanctions against Iran's banking sector and difficulties transferring foreign currency have resulted in deep-rooted problems. Pharmaceutical companies are finding it hard to export medicines to Iran due to the banking sanction, according to UN secretary general Ban Kimoon. However, the Iranian government has shunned these sanctions, insisting that its nuclear programme should continue.
BMI Economic View: The increase in prices - we forecast inflation to average some 45-50% - is set to have dramatic consequences for the country's economic outlook. For one, with imports of consumer goods becoming increasingly expensive, and purchasing power falling, private consumption will be hit hard. Moreover, industrial production could come to a standstill, as imported machinery and assembly parts become increasingly expensive. Foreign direct investment (FDI) will slow significantly, as earnings will evaporate due to high inflation and the falling value of the local currency. Finally, local trade will slow, with several sellers reportedly preferring to hoard products to sell them at higher prices later on, and contracts becoming increasingly difficult to write and enforce.
BMI Political View: The accountability of Iran's regime continues to deteriorate, with the institution of the presidency set to weaken while the power of unelected bodies increases. However, as the worsening economic situation, including rampant inflation, triggers popular discontent, spontaneous protests will increase going forward. As a result, we expect political instability to rise in the coming years.
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