Jordan Pharmaceuticals & Healthcare Report Q4 2013 - New Market Report

BMI has made an upwards revision to its long-term forecast for Jordan's pharmaceutical market. On the basis of several positive developments since the beginning of the year - including the easing of the pressure on the country's external position on the back of a recovery in foreign grants, lower global food and oil prices and a modest stabilisation in the Egyptian gas supply - BMI's Middle East and Africa (MEA) Country Risk team have raised the 2013 real GDP growth forecast. Fewer risks in regards to the devaluation of the dinar are expected over the medium term, with our forecasts now envisaging stabilisation/constant exchange of the dinar against the US dollar over the next decade.

Headline Expenditure Projections

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* Pharmaceuticals: JOD620mn (US$876mn) in 2012 to JOD683mn (US$962mn) in 2013; +10.0% in local currency terms and +9.8% in US dollar terms. Local currency forecast somewhat higher than the previous quarter's projection on account of macroeconomic factors and upward revision of historical figures.
* Healthcare: JOD1.91bn (US$2.70bn) in 2012 to JOD2.07bn (US$2.91bn) in 2013; +8.1% in local currency terms and +7.9% in US dollar terms. Local currency forecast broadly in line with the previous quarter's projection.

Risk/Reward Rating: Our risk and reward assessment tool - the proprietary Pharmaceutical Risk/Reward Rating (RRR) - ranks Jordan 12th out of 30 markets surveyed in the Middle East and Africa (MEA) region in Q413. While Jordan again scores above the regional average, its small population size (of around 7mn) will continue to pose constraints in terms of potential pharmaceutical market growth.

Key Trends And Developments

* According to July 2013 reports by Bloomberg, UK-listed drugmaker Hikma Pharmaceuticals has funds of up to US$600mn for takeovers in the Middle East and Africa regions. The company is likely to conclude one such small- or medium-sized transaction in 2013, according to CEO Mazen Darwazah, who added that Hikma will spend US$100mn in the sub-Saharan Africa region on buying existing business and establishing new ones. The company is also reportedly considering acquisitions in regions such as the Middle East, the former Soviet Union states, Turkey and Africa.

BMI Economic View: Economic growth in Jordan will remain sluggish over the coming quarters, with ongoing fiscal consolidation and inflationary pressures putting strain on household and government consumption. Regional instability remains elevated and we believe the stage is set for a prolonged sectarian civil war in neighbouring Syria, to the continued detriment of foreign investment inflows and tourism arrivals in Jordan.

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