BMI View : As tight fiscal budgets continue to restrict medicine sales in developed markets (primarily Europe, but also the US, and to a lesser extent Japan, Australia and Canada), pharmaceutical companies that have a strong presence in emerging markets will continue to benefit from the growing demand for medicines in these ' non-traditional ' markets. However, risks exist in emerging markets - including industry specific concerns (such as low per-capita spending, poor access to healthcare facilities and a lack of adherence to intellectual property laws) and those emanating from the state's political/economic profile (such as high inflation) that will pose as risks to investment . As the end of 2013 approaches, we look forward to 2014 and identify pharmaceuticals markets that will present the most opportunity and risk in the next 12 months.
Multinational pharmaceutical companies will continue to capitalise on Latin America's increasing demand for advanced medicines in 2014. However, as they deepen their ventures in the region, major drugmakers are more exposed than ever to local political and macroeconomic changes. Sustained success will come from more proactive approaches to understand and embrace local trends and developments in each individual market.
As governments focus on meeting debt reduction targets, we believe the pharmaceutical industry will remain a focus for cost containment in 2014, especially because of the relative ease with which governments can target the sector, rather than pursuing less politically friendly cuts such as reducing the number of hospital beds. While governments have implemented harsh measures such as price cuts on medicines in previous years, in 2014, we believe growth in the region's pharmaceutical market will be restricted as a result of government efforts to ensure cost effective pricing and rational prescribing of medicines, and a shift towards greater patient contribution towards healthcare costs.
Central & Eastern Europe
Within the Central and Eastern European markets, 2014 offers growth from periphery countries and decline in the heart of Europe. While markets such as Russia and Kazakhstan will continue on their growth trajectories, this will come with the caveat of persistent risk. Central European markets such as Hungary will continue to decline or stagnate as the overriding concern will be to suppress pharmaceutical expenditure and balance budgets. Generic drugmakers will benefit primarily in all markets as affordability of medicines and ensuring access remains the priority of the healthcare systems throughout the region.
The diverse nature of the pharmaceutical sector in the Asia Pacific region means that different stakeholders will stand to benefit from different countries in the region. We particularly highlight the rising importance of elderly care, which will benefit nursing home providers, medical device companies and pharmaceutical firms looking to enter developed countries in the region. Meanwhile, generic drug firms will benefit from the increased use of generic medicines in the region, although the common theme of price containment will bring downside risks to the pharmaceutical industry.
Middle East & Africa
The pharmaceutical markets of the Middle East and Africa are becoming increasingly penetrated by international drugmakers due to their large populations, economic development- allowing for better financial and geographical access to healthcare services - and continued heavy reliance on imported medicines. BMI's pharmaceutical expenditure model reveals that Ghana and Kenya will experience the fastest increase in medicine sales among Middle East and African countries in 2014 at 18.8% and 16.2% respectively. Following them are the fastest growing Middle East countries, namely Qatar (14.0%) and Bahrain (11.5%).