INDIA
According to IBEF (India Brand Equity Foundation), India healthcare industry which comprises hospital and allied sectors, is projected to grow 23 per cent per annum to touch US$ 77 billion by 2012 from the current estimated size of US$ 35 billion.
The sector has registered a growth of 9.3 per cent between 2000-2009, comparable to the sectoral growth rate of other emerging economies such as China, Brazil and Mexico. According to the report, the growth in the sector would be driven by healthcare facilities, both private and public sector, medical diagnostic and pathlabs and the medical insurance sector.
Healthcare facilities, inclusive of public and private hospitals, the core sector, around which the healthcare sector is centred, would continue to contribute over 70 per cent of the total sector and touch a figure of US$ 54.7 billion by 2012.
Adds a FICCI-Ernst and Young report, India needs an investment of US$ 14.4 billion in the healthcare sector by 2025, to increase its bed density to at least two per thousand population.
According to a latest report by McKinsey, driven by strong local demand, Indian healthcare market is expected to continue growing close to previously projected rates of 10 to 12 per cent. With average household consumption expected to increase by more than seven per cent per annum, the annual healthcare expenditure is projected to grow at 10 per cent and also the number of insured is likely to jump from 100 million to 220 million.
India Pharmaceuticals and Healthcare Report Q1 2010
India’s US$14.71bn pharmaceutical market is in a state of transition. As the country’s economy grows, foreign firms are increasing their presence, the government is spending more on healthcare and local firms are looking abroad for new growth opportunities. Through to 2019, BMI is forecasting a compound annual growth rate (CAGR) of 13.77% for medicine sales in India.
India’s attractiveness to multinational pharmaceutical has increased over the past quarter. The country’s score on BMI’s Pharmaceutical Business Environment Ratings has risen from 48.2 in Q409 to 52.8 in Q110. This has also resulted in India moving up to 9th in the proprietary rankings system. The main driver of this improvement was a re-assessment of both the size and growth of the pharmaceutical market. India’s Pharma rating is just below the regional average (53.2), but above the global average (51.5). Over the medium term, we fully expect India’s ranking to improve significantly.
India’s rural market represents an enormous opportunity for drug-makers and medical device firms. Although anticipated margins are slim, volumes of units sold will be large. In an effort to become the leading pharmaceutical firm in its domestic market, Ranbaxy revealed in December 2009 that it intended to penetrate the challenging rural market. Other companies with a similar strategy include Fortis Healthcare, Novartis, Elder Pharmaceutical and GE Healthcare.
BMI’s Burden of Disease Database (BoDD) reveals that non-communicable diseases – such as diabetes and cancer – have a slightly greater burden in India than non-communicable diseases – such as tuberculosis and HIV/AIDS. In 2008, a total of 99,892,742 diability-adjusted life years (DALYs) were lost to communicable diseases, while 116,772,455 DALYs were lost to non-communicable diseases.
JAPAN
Japanese healthcare industry is ranked second in the world, with its main challenge being the aging population.
Complete coverage of medical expenses by insurance adds a point to its rank. Thus, changes in the economy are likely to have little effect on the industry – even with the current decline in labor force and with increasingly aging population.
The pharmaceutical and drugs industry of Japan is challenged with issues pertaining to the launch of blockbuster drugs, sales and marketing productivity, and structural reforms. Bungyo – the separation of prescribing and dispensing drugs by doctors and pharmacists, – is soaring, and expected to reach 80 percent in the next five years.
With 100 percent insurance coverage for medical expenses and in view of the fact that physicians across the country charge a fixed fee irrespective of their qualification and experience, patients are choosing to go to bigger hospitals for treatment.
The medical devices industry is also highly competitive and is a trade hub for countries such as the United States and Europe. Demand from the growing population of aged people for better medical facilities is one of the reasons for the increasing volume of imports in this industry.
With the opening up the Japanese economy with less regulations across industries and sectors, the Government’s initiative to develop standards and encourage best practices across the healthcare industry is likely to enhance Japan’s global competitiveness. The country’s medical facilities are also expanding to meet the long-term goal of promoting development, raising the standards of living, and narrowing the gap with developed countries. This opens up plenty opportunities for more adventurous players.
Japan Pharmaceuticals and Healthcare Report Q2 2010
BMI forecasts Business Monitor International that the value of Japanese pharmaceutical market at retail prices will increase at a very modest compound annual growth rate (CAGR) of 1.25%, as measured in local currency. However, when calculated in US dollars, growth will fall into negative territory. The market will reach a value of JPY9,619bn (US$87.45bn) in 2014, up from of JPY9,040.1bn (US$95.16bn) in 2009. Over our longer, ten-year forecast, we expect the growth rate to drop to under 1% as public purse-strings are tightened further.
Japan is looking to triple its generics sector by 2012. In 2009, generic drugs represented an estimated 9.4% of the total market by value, with BMI forecasting this share to increase to 15.5% in 2014, and further to 23.5% by the end of 2019.
Despite the low annual growth rate expected in the coming years, the Japanese drug sector continues to benefit from a large relative (per-capita consumption was estimated at almost US$750 in 2009) as well as absolute – with its population numbering over 127mn – usage of medicines, Indeed, in our updated Q210 Business Environment Ratings (BERs) table for the 15 key markets in the Asia Pacific region, Japan regained its pole position, previously held by Australia. Globally, Japan is ranked as the fourth most attractive market for multinational drugmakers, after the US, Germany and Canada.
Opportunities in the generics sector are to be increasingly explored by foreign companies, with Israeli generics specialist Teva and traditionally research-based Pfizer recently reporting their plans for entry into the market. In terms of other notable company news over the past quarter, Teva-Kowa Pharma, a 50:50 joint venture (JV) between Teva and Japanese drugmaker Kowa, entered into an agreement to acquire a majority stake in Taisho Pharmaceutical Industries. The acquisition will help Teva-Kowa to achieve its growth plan in Japan by bringing in local expertise and know-how.
Earlier in the year, Teva- Kowa announced its plans to start selling generic cancer drugs from January 2010. Leading Japanese drugmaker Takeda revealed that it would enter the South American drug market via the acquisition of a generic drugmaker in the region, though the company is yet to elaborate on any potential targets. Over the coming five years, pharmaceutical imports will grow at a faster rate than exports – benefiting from regulatory and pricing environment improvements – and result in an expanding trade deficit through to 2014, with generic medicines making a major impact in volume terms. The competitive nature of the multinational sector’s hi-tech imports will add to pressures on the pharmaceutical trade balance, especially as the level of domestic research and development (R&D) industry activity lags behind that in other major markets.
MIDDLE EAST
Middle East healthcare market estimated over $100bnAccording to a recent study, population in the Middle East has exceeded 370m and is estimated to reach over 520m by 2030.
Growing population, mainly dominated by the expatriate community in most of the GCC countries, has given rise to the a rapidly growing market for healthcare and its associated industries, which is now touching $100bn mark in the Middle East alone.
Healthcare markets in the Gulf region are changing quickly. Due to the huge increase in the expatriate population, it is also one of the fastest growing regions with an estimated annual growth of 15%. Business opportunities in the import-dependent marketplace of the five main countries in the region have dramatically increased from where they were a few years ago.
Saudi Arabia, as the richest regional market, has planned to increase the numbers of hospitals from 264 to over 500 in next 7 years. United Arb Emirates (UAE) is also setting trends in providing best healthcare standards on public & private level not only for the growing population within the country but also for patients from across the region seeking the best medical facilities. The UAE healthcare market is projected to rise from $3.2bn in 2005 to $11.9bn in 2015.
The market in the Middle East countries, however, is heavily reliant on the fluctuating price of oil, which dictates the strength of the economy and, in turn, reflected in healthcare provision and the pharmaceutical market. This trend necessitates a global interactive platform for the healthcare industry and medical community to explore the latest advancements, compare alternates and reach mutually beneficial conclusions.
SAUDI ARABIA
Saudi Arabia Pharmaceuticals and Healthcare Report Q1 2010
source: http://www.marketresearch.com
In BMI’s Q1 2010 Business Environment Ratings, Saudi Arabia is ranked fifth of the 17 Middle East and African (MEA) markets. This is a drop from the country’s previous second place in Q409 and is due to a drop in its score for limits of potential returns. From 2009 to 2014, the pharmaceutical market is expected to post a compound annual growth rate (CAGR) of 6.44% in both US dollar and local currency terms. Council of Co-operative Health Insurance (CCHI) secretary general Dr Abdullah Al Sharif has said that the council has plans to develop a comprehensive healthcare management system centred on health economics and pharmacoeconomics in conjunction with the Saudi Food and Drug Authority.
Since Saudi Arabia has both the largest population and the highest level of pharmaceutical spending in the Gulf Co-operation Council (GCC) there is a strong possibility that the Kingdom could itself become a medical tourism destination to rival Jordan. Saudi Arabian consumers will spend 4% of their GDP on healthcare by 2013 and the government is currently constructing more hospitals and recruiting more healthcare professionals to address issues with access to healthcare services in the country.
Chronic diseases such as hypertension, diabetes and obesity are forming an increasingly large portion of the region’s epidemiological profile. Domestic drugmakers in the region, such as Gulf Pharmaceuticals Industries (Julphar) in the UAE, are using exports to reach other GCC states; however, international accreditation for manufacturing practice would allow firms like this to target more lucrative global markets.
Saudi Arabia is highly reliant on foreign doctors for the provision of healthcare. An estimated 78% of the Kingdom’s 43,000 doctors are expatriates. Recently, Saudi Arabia recruited 500 doctors from Bangladesh for the 2,000 health centres across the country. In total, 4,000 doctors had been recruited to 150 new family health centres by early 2008. A further 7,000 should be recruited over the next few years in an attempt to bring the doctor:patient ratio down from 1:4,000 to 1:400. Many of these extra doctors are expected to come from abroad – mostly from less wealthy Arab countries such as Syria, Jordan and Egypt.
The shortage of nurses in the country has initiated an international recruitment drive to make up the deficit. In 2008, the Kingdom recruited 8,000 nurses, with a quarter of these from the Philippines. The government still holds long-term ambitions to decrease dependence on foreign staff, with places on specialist nursing courses reserved for Saudi women.
The country is in dire need of over 4,000 more medical staff. BMI would encourage Saudi Arabia to provide better training and incentives to provide more native doctors, while only using foreign staff as a temporary measure.
United Arab Emirates (UAE)
United Arab Emirates Pharmaceuticals and Healthcare Report Q1 2010
source: http://www.marketresearch.com
In November 2009 the UAE government announced that an independent federal authority will be established to regulate the quality and safety of food and drugs entering the country.
BMI believes that the successful implementation of this body – essentially a UAE version of the US Food and Drug Administration (FDA) – will be attractive to multinational drug-makers operating in the country.
We expect the total drug market to increase in value from US$1.31bn in 2008 to US$1.5bn by 2009. Thereafter, we expect the drug market to reach US$2.65bn by 2014, representing a compound annual growth rate (CAGR) of 21% in US dollar terms.
Our extended 10-year forecast indicates that the market will reach US$3.4bn by 2019, showing a slow CAGR of 5.2% from 2014 onwards. We believe that as the second largest pharmaceutical market in the Gulf Co-operation Council (GCC) region after Saudi Arabia, the UAE’s introduction of a proper regulatory body is a wise move.
Saudi Arabia already has the SFDA, which affiliates testing laboratories for drugs and food products. We note that recently the fluctuations in medicine prices in the UAE have led to greater pressure on the government to import and manufacture more generic drugs. This is yet to happen due to the lack of testing facilities in the country. Bioequivalence and other quality control analyses are not consistently carried out for foreign medicines entering the UAE. Instead, medicines come from the EU or US where strict regulations are already in force.
Healthcare sector advertising in the GCC region during January-September 2009 was worth approximately US$162mn, according to the findings of UAE-based research group the Pan Arab Research Centre. The group has revealed that total 2009 spending on advertising for the industry could reach US$215mn. BMI believes that since the member states of the GCC are undergoing healthcare reform or promoting medical tourism (in the more developed countries), the increased spending on advertising is to be expected.
The creation of the Healthcare City (HC) in Dubai has yet to fulfil its potential for attracting international patients. BMI believes the Dubai government has to promote its medical tourism benefits more widely in order to gain considerably from its substantial investment. At present, the HC has 80 English-speaking clinics, with highly qualified doctors, cheaper prices per procedure than the US, no waiting times and the close proximity of holiday areas already renowned for luxury and relaxation. Construction of the second phase of the HC’s complex will include spas and other ‘wellness’ facilities. The completed complex will form the largest medical tourism centre between Asia and Europe.
For detailed reports, please go to Business Monitor International (BMI) http://www.marketresearch.com
Business Monitor International
Business Monitor International (BMI) publishes specialist business information on global emerging markets for senior executives in more than 125 countries worldwide. A wholly independent, London-based company, BMI has specialized in the analysis of global emerging markets since its foundation in 1984. BMI’s comprehensive range of weekly, monthly and annual reports contains the latest available data, forecasts and analysis on political risk, economic performance and outlook, the business environment, finance and leading industry sectors.
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