BMI View: Despite the rising demand for medicines and health services - driven by a high communicable-disease burden - the pharmaceutical and healthcare industry in Zimbabwe will continue to underperform, as has been the case in recent years. Government hospitals are vastly outdated and poorly managed following years of insufficient funding, forcing patients to seek private treatment, which is unaffordable to the majority of Zimbabweans. Imported medicines will continue to dominate pharmaceutical sales as local drug manufacture r s struggle to stay afloat in an unfavourable domestic environment.
Headline Expenditure Projections
Pharmaceuticals: USD361mn in 2014 to USD380mn in 2015; +5.2% in US dollar terms. Forecast unchanged from last quarter .
In BMI's Risk/Reward Index (RRI) for Q4 2015, Zimbabwe scores 27.8 out of 100, unchanged from last quarter. However, due to the deteriorated scores of Nigeria (26.8) and Angola (26.0), the country moves up two positions to rank 29th out of the 31 markets surveyed in the Middle East and Africa (MEA) region. Zimbabwe will remain one of the least-attractive pharmaceutical and healthcare markets regionally and globally, due to the elevated political, economic and social risks, as well as the lack of finances for adequate healthcare provision and capacity utilisation.
Key Trends a nd Developments
Zimbabwe's government hospitals are at risk of financial collapse due to rising debts, outdated equipment, poor funding and maladministration, among other pressing issues. Health experts are concerned at the rate with which the situation is worsening, stating that the country's government hospitals could be rendered ineffective and unable to attend to even minor conditions. This would force patients to seek treatment at costly private hospitals, which the majority of Zimbabweans are unable to afford. The desperate situation at public health institutions is being blamed on the lack of sensible funding from the treasury over the past several years (allAfrica).
Pharmaceutical manufacturing in Zimbabwe will continue to underperform, as has been the case in recent years. This was initially caused by the high levels of inflation in the economy, due to the redistribution policy of the political regime. The domestic pharmaceutical industry is currently reportedly running at a capacity of only 20%, despite the rising demand for medicines.
Zimbabwe's finance ministry has reportedly remitted USD61.64mn to the Premier Service Medical Aid Society (PSMAS) over the past six months of 2015 against a bill of USD71.64mn. The move is aimed at restoring the normal operations of the medical aid society. Members of the PSMAS were failing to effectively access healthcare facilities due to delayed employer contributions.
Zimbabwean pharmaceutical product manufacturer Datlabs has deferred plans to renovate its intravenous fluids manufacturing unit in Bulawayo, Zimbabwe. The facility has not been operating for the last 10 years and the company had allocated approximately USD2mn for the refurbishment, according to Financial Gazette's Companies & Markets. However, the company was forced to shelve the production of intravenous fluids after the government, which was a major customer for the product, specified that it would instead acquire the product through donations from foreign donors.
Zimbabwe's Health Minister David Parirenyatwa has announced that the government is introducing a law that will force hospitals across the country to provide medical services to any admitted patient. The announcement came following a case in which admission fees were hiked 100%. The Cimas medical aid society has also increased its membership contribution fees by 50%. Parirenyatwa stated in an interview with NewZimbabwe.com that only the government is authorised to approve new admission fees and will soon call in hospital management for an explanation. According to him, hospitals that want to increase medical fees should discuss their proposal with the ministry first.
BMI Economic View
A poor harvest, subdued mineral prices and weak consumer spending will curtail economic growth in Zimbabwe during 2015. We are currently forecasting real GDP to expand by 2.4% in 2015 and 2.8% in 2016.
BMI Political View
Zimbabwean President Robert Mugabe's second cabinet reshuffle in six months is symptomatic of growing factionalism within the ruling ZANU-PF party. Although President Mugabe's wife Grace was not selected for a cabinet position, her growing presence in political life heightens uncertainty over the post-Mugabe political climate.