BMI View: Uganda's pharmaceutical market remains dampened by poor funding and consequently underdevelopment. The private sector makes up the clear majority of pharmaceutical spending in the country in terms of value and strong private consumption growth will drive medicine spending further in this regard. Opportunities will be present for those multinationals involved in the selling of high-value patented drugs. A growing communicable and non-communicable disease burden will also contribute to increased spending towards medicines over our forecast period to 2019.
Headline Expenditure Projections
Pharmaceuticals: UGX1,146bn (USD433mn) in 2014 to UGX1,256bn (USD427mn) in 2015; +9.7% growth in local currency terms and -1.3% in US dollar terms.
Healthcare: UGX6,304bn (USD2.4bn) in 2014 to UGX6,896bn(USD2.4bn) in 2015; +9.4% growth in local currency terms and -1.5% in US dollar terms.
Uganda is ranked 25th in the Middle East and Africa (MEA) region, with the same score of 30.7 out of a total of 100 as in previous quarter, above several countries including Nigeria and Sudan. While factors such as population growth and increasing healthcare needs will create a growing demand for pharmaceuticals, we note that a sizeable counterfeiting industry, poor healthcare funding, corruption, regulatory environment deficiencies and a number of other issues will combine to keep Uganda in a similarly low position in the MEA matrix over the coming months.
Key Trends And Developments
In July, Investors at Cipla Quality Chemical Industries Limited (CiplaQCIL) filed a petition to the Parliamentary Health Committee in Uganda, accusing the Ugandan government of importing antiretrovirals (ARVs) despite the firm having the ability to locally produce the drugs economically, according to allAfrica. CiplaQCIL executive director of finance, Fredrick Mutebi-Kitaka, noted that despite the government agreeing to give CiplaQCIL monopoly for all its public sector requirements, it only purchases 20% of the supply. If the government were to stand by the agreement, the company would be able to spread out production volumes over currently idle capacity which in turn would bring down prices by about 20%, Mutebi-Kitaka noted.
In July, Uganda's regional referral hospitals continue to be burdened with arrears, especially for utilities such as power and running water as a result of a poorly financed non-wage recurrent budget according to the Ministry of Finance's policy brief in May 2015. Some hospitals have opted to ration water and lighting which has lead to the irregular cleaning of wards. To deal with the issue, the finance ministry has recommended the health ministry establish a minimum fund allocation for hospitals while also controlling the setting up of new health units.
The Ugandan parliamentary HIV/AIDS committee is in the process of introducing regulations to operationalise a trust fund in a bid to help HIV-positive people receive proper treatment. The fund was set up to secure a predictable and sustained means of procuring goods and services for HIV/AIDS counselling, testing and treatment. After becoming operational, the trust's resources will be credited directly to the funds account.
BMI Economic View
Recently published data by the Uganda Bureau of Statistics (UBoS) show that in first three months of 2015, or Q3 FY2014/15 (running July to June), the Ugandan economy posted a real terms expansion of 5.0% year-on-year (y-o-y) and 0.3% quarter-on-quarter (q-o-q). While we have recently nudged down our real GDP growth forecasts for the country on account of rising inflationary pressures and tighter monetary conditions, we maintain that growth will remain relatively robust in 2015 and 2016, at 5.6% and 5.7% respectively
BMI Political View
Although President Yoweri Museveni will face little meaningful competition at next February's general election, his efforts to mobilise a disenfranchised electorate and maintain support within his increasingly divided party will be both costly and distracting. The president's popularity and political capital has diminished significantly in recent years but his grip on power remains firm.