Boston, MA -- (SBWIRE) -- 08/23/2013 -- We do not expect any improvements in the way of the operating environment for pharmaceutical industry players in Zimbabwe, especially as the political situation remains tense in the runup to the elections. Although a Japanese drugmaker announced it will build a manufacturing facility in the country, we see this as an isolated example of foreign direct investment (FDI) into Zimbabwe, on account of an overwhelmingly negative business situation. We continue to envisage a continuation of medicine shortages, especially as local manufacturers fold their drug production operations due to unviability and competition posed by imports.

Headline Expenditure Projections

- Pharmaceuticals: US$203mn in 2012 to US$223mn in 2013; +10.0% in local currency and US dollar terms. Forecast largely in line with Q213.

Risk/Reward Rating: In BMI's Pharmaceutical Risk/Reward Rating (RRR) table for Q313, Zimbabwe is again ranked 28th out of the 30 markets surveyed in the Middle East and Africa (MEA) region, even following a minor reweighting of one of the RRR components that had been implemented to improve the tool. Zimbabwe will remain one of the least-attractive pharmaceutical and healthcare markets regionally and globally, on account of the elevated political, economic and social risks,, as well as the lack of finances for adequate healthcare provision and capacity utilisation.

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Key Trends And Developments

- In April 2013, Zimbabwe-based MedTech Holdings Limited was reported to have accepted an offer from a local firm to buy its remaining stake in Zimbabwe Pharmaceuticals (Zimpharm). Although the offer involves a nominal sum, it provides certain guarantees against the company's huge losses, the directors added. In mid-2012, the company outlined its plans to offload the unprofitable unit, and followed it up in November 2012 by closing down the associate owing to feasibility concerns. This also highlights the operating difficulties facing the wider pharmaceutical and healthcare sector in the country.
- In February 2013, the Zimbabwean Ministry of Health and Child Welfare ordered nursing training institutions to curtail nursing enrolments, owing to financial constraints, as the government cannot absorb the nurses completing training. In 2009, the government imposed a ban on hiring nurses. However, the move is viewed as having a negative consequence on the need to prioritise non-emergency care in a bid to cut costs.

BMI Economic View: Zimbabwe continues to face significant liquidity constraints as net inflows to the dollarised economy continue to be limited due to political uncertainty in the lead-up to elections, the exact timing of which also remains unclear at present. Although this is helping to keep inflation very low, it is also curbing economic growth. We forecast headline real GDP growth of 4.9% in 2013 with risks weighted to the downside.

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