BMI View: Growth in Angola's healthcare sector will remain subdued over the near term as lower oil prices persist. A consequence of the oil price crash has seen a sizeable cut in the much-needed government funding for the healthcare sector following the revised state budget in February 2015. The funding cuts and weak consumer purchasing power amid the economic slowdown will result in increasingly unfavourable conditions for multinational pharmaceutical companies.
Headline Expenditure Forecasts
Pharmaceuticals: AOA32.09bn (USD326mn) in 2014 to AOA34.25bn (USD302mn) in 2015; +6.7% in local currency and -7.4% in US dollar terms. Forecast revised downwards from last quarter.
Healthcare: AOA514.17bn (USD5.22bn) in 2014 to AOA494.91bn (USD4.36bn) in 2015; -3.7% in local currency and -16.5% in US dollar terms. Forecast revised downwards from last quarter.
Angola's Pharmaceutical Risk/Reward Index (RRI) score for Q415 is 26.0, just lower than Nigeria (26.8). It falls three places from last quarter's ranking, making it the least attractive pharmaceutical market of the 31 countries in the Middle East and Africa region.
Key Trends And Developments
The first Chinese-funded private hospital, Zhong Yan Hospital, was opened in the Zango district of Luanda in Angola, reports allAfrica. The USD10mn hospital was financed by the China-based Zhong Xing Construction Company. The hospital was inaugurated by Angolan Minister of Health Jose Van Dunem, Governor of Luanda Graciano Domingos, other Angolan government officials and representatives of the Chinese Chamber of Commerce in Angola. Currently, the hospital has 87 beds for inpatients and more than 100 doctors and nurses from China, Cuba and Angola. The hospital is expected to reduce the strains on Angolan health services caused by a fast growing population.
Angolan Health Minister Jose Van-Dunem has promised to pay special attention to those in the country suffering from diabetes. The minister's statement was made during a speech at the opening of a training course on the use of diabetes drug Heberport-P, which was held from June 8 to 25. The initiative includes aspects of education and patient comfort, with the aim of also working towards affordable diabetes medication at pharmacy prices and greater availability in hospitals; from oral anti-diabetics to insulin.
The Republics of Angola and Sao Tome and Principe are considering signing of agreements in the field of health, in a move to strengthen bilateral relations. Health Minister of Sao Tome and Principe, Maria dos Santos Trovoada, considers Angola to be ahead in terms of human resources and medical equipment and announced her interest in the development (allAfrica).
BMI Economic View
We have revised up our 2015 GDP growth forecast for Angola from 1.9% to 2.5%. This is due to an expected ramp up in oil production, with our Oil & Gas team forecasting production will increase to 1.9mn b/d in 2015 from an estimated 1.8mn b/d in 2014. However, this still leaves us well below consensus on growth, which is currently 3.1%.
BMI Political View
Fuel subsidy cuts, currency depreciation, and rising inflation will sustain resentment in Angola. While not an immediate threat to regime stability, rising living costs will fuel political discontent and increase pressure on the government to deliver on its ambitious social development agenda.