BMI View: Despite Sri Lanka's short-term fiscal challenges, the country's pharmaceutical and healthcare markets will continue to expand over the forecast period. In fact, under the FY2016 budget, the government outlined the construction and upgrade of several healthcare facilities, which will broaden access to health services in the country while strengthening the health system ability to cope with latent and growing demand for the treatment of chronic diseases. However, public spending figures will observe partial cuts or adjustments as part of the country's recent agreement to secure an international bailout loan, while we expect pro-generic medicine s policies and low per-capita drug spending to limit Sri Lanka's appeal to innovative pharmaceutical investors .
Headline Expenditure Projections
Pharmaceuticals: LKR82.88bn (USD610mn) in 2015 to LKR90.57bn (USD610mn) in 2016; +9.3 in local currency terms and +0.3 in US dollar terms. Forecast in line with last quarter.
Healthcare: LKR295.23bn (USD2.17bn) in 2015 to LKR321.31bn (USD2.17bn) in 2016; +8.8 in local currency terms and -0.1 in US dollar terms. Forecast revised downwards from last quarter.
|f = BMI forecast. Source: National sources, WHO, BMI|
|Pharmaceutical sales, USDbn||0.570||0.610||0.610||0.640||0.670||0.720||0.760|
|Pharmaceutical sales, % of GDP||0.77||0.79||0.79||0.78||0.77||0.75||0.73|
|Pharmaceutical sales, % of health expenditure||27.7||28.1||28.2||28.1||27.9||27.5||27.0|
|Health spending, USDbn||2.080||2.170||2.170||2.270||2.420||2.620||2.830|
In Q316, Sri Lanka's Risk/Reward Index (RRI) score remains unchanged at 35.3 out of a total of 100, making it the third least attractive market to pharmaceutical investors out of 19 countries monitored in the Asia Pacific region. The main reason for the country's low score is the relatively small population size, which translates into modest business opportunities by regional standards, as well government efforts to encourage the use of generic drugs. On the upside, Sri Lanka observes relatively high sector value growth.
On May 23 2016, Sri Lanka's Finance Ministry said a range of items imported for flood relief, including medicine and medical equipment, will be given concessions to ensure their speedy release.
On May 2 2016, a value added tax (VAT) charge of 15% became effective in Sri Lanka across multiple sectors, including healthcare services, as the government attempts to address fiscal imbalances.
In March 2016, Sri Lanka's Director General of Health Services Palitha Mahipala noted that the government allocated a total of LKR216bn (USD1.4bn) to the sector, including LKR45bn (USD311mn) to be spent on pharmaceuticals, while other funds will be channelled towards building three cancer hospitals at Thilippale, Kandy and Matara.
These healthcare sector improvements follow the FY2016 budget unveiled in November 2015, where Sri Lanka's authorities outlined numerous programmes and initiatives, from the development of the District Hospital Kalutara into a Specialised Maternal and Children's Hospital to the provision of radiotherapy for cancer patients.
BMI Economic View
Sri Lanka's industrial sector is likely to recover over the course of the year on the back of a stable political climate. However, we expect the broader economy to face multiple headwinds stemming from a volatile agricultural sector, a weak consumption growth outlook, poor government finances, and rising risks of a BoP crisis. As such, we forecast Sri Lanka's real GDP growth to remain stable at 4.8% in 2016.
BMI Political View
Following the election of President Maithripala Sirisena in January 2015 and the UNP's victory in the August general election, socio-political and economic reform momentum in Sri Lanka has started to gain traction. However, we note that the grand coalition arrangement (made up of two rival parties) is highly susceptible to political gridlock, and will continue to pose downside risk to the policy-making process in the country.
The Sri Lanka Pharmaceuticals & Healthcare Report features BMI Research's forecasts for drugs and healthcare expenditure and imports and exports, focusing on the growth outlook for the prescription, OTC, patented drugs and generics market segments.
BMI's Sri Lanka Pharmaceuticals & Healthcare Report provides industry professionals, strategists, company executives, investors, analysts and sales/marketing heads with independent forecasts and competitive intelligence on the Sri Lanka pharmaceutical and healthcare industry.
- Benchmark BMI's pharmaceutical and healthcare market forecasts for Sri Lanka, to test other views - a key input for successful budgeting and strategic business planning in the Sri Lankan pharmaceutical and healthcare market.
- Target business opportunities and risks in the Sri Lankan pharmaceutical and healthcare sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Sri Lanka.
- Assess the activities, strategy and market position of your competitors using our company profiles (including SWOTs, KPIs and latest activity) and competitive landscape tables.
BMI Industry View
An at-a-glance perspective on the latest regulatory developments, key forecast indicators and major corporate developments, covering the prescription, OTC and generics markets. The pharmaceuticals and healthcare SWOT outlines strategic factors that affect the basic assumptions underpinning BMI’s forecast analysis, and taken together with BMI’s political, economic and business environment SWOTs, it gives a complete overview of market climate.
BMI Industry Forecast Scenario
Industry forecasts to end-2019 for all key indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecasts:
- Healthcare: Total healthcare expenditure (USDbn), healthcare expenditure (% of GDP), healthcare expenditure per capita (USD), hospital beds, doctors, and birth & mortality rates (all per ‘000 population).
- Pharmaceutical Market: Drug expenditure in USDbn, % of GDP and per capita (USD).
- Patented Drug Market: Prescription drug sales (USDbn & % of total sales).
- Generic Drug Market: Generic product sales (USDbn), generic sales (% of total sales).
- OTC Drug Market: OTC sales (USDbn & % of total sales).
- Macroeconomic Forecasts: Nominal and real GDP, % real GDP growth, % private consumption growth, % industrial output growth, % consumer price index, % GDP price deflator, exports, imports, trade balance, current account balance, foreign direct investment, exchange rate against USD, government expenditure and external debt.
BMI’s Pharmaceuticals and Healthcare Risk Reward Index
BMI’s Risk Reward Index provides investors (both national and multinational) looking for opportunities in the region with a clear country-comparative assessment of the market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
A snapshot of key market characteristics, including total size of the pharmaceuticals and healthcare segments, growth drivers, leading therapeutic areas and the competitive landscape
A focus on government healthcare reforms, epidemiological trends, mergers and acquisitions, product launches, market entries, FDI activity, R&D, biotechnology, clinical trials and supply chain issues.
Details of the industry regulatory framework and key legislation covering the licensing of new products/services, pricing and reimbursements, intellectual property, taxation and advertising, as well as analysis of the overall regulatory burden.
The competitive landscape section provides comparative company analyses and index by USD sales and % share of total sales – for the total pharmaceutical sector, as well as the OTC, generics and distribution sub-sectors.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.