Tanzania Pharmaceuticals and Healthcare Report Q3 2012
BMI View: It is vital the Tanzanian government assesses its medicine procurement systems. The expiry of medicines does not bode well for the state and its high reliance on donor funding for the healthcare sector, particularly as reports have highlighted the poor availability of essential medicines in the country.
Furthermore, we believe the investment in improving the medicine procurement process will increase Tanzania's attractiveness as a location in which to sell medicines.
Headline Expenditure Projections
• Pharmaceuticals: TZS340.1bn (US$214mn) in 2011 to an anticipated TZS404.4bn (US$250mn) in 2012; +18.9% growth in local currency terms and +16.7% in US dollar terms.
• Healthcare: TZS1,807.87bn (US$1.14bn) in 2011 to TZS2,064.54bn (US$1.28bn) in 2012; 14.2% growth in local currency terms and 12.1% in US dollar terms.
Business Environment Rating: In BMI's Q312 risk/reward ratings, Tanzania is ranked 20th in the MEA region, above Zambia and Kenya and below Ghana and Gabon. A sizeable counterfeiting industry, poor healthcare funding, corruption, regulatory environment deficiencies and a number of other issues will conspire to keep Tanzania in a similarly lowly position in the MEA matrix. Nevertheless, in comparison with many other African markets (most of which are not surveyed by BMI), Tanzania offers more commercial promise and a more stable overall business environment.
Key Trends And Developments
• In positive news for the Tanzanian population, the commercial production of country's first locally manufactured ARV drugs, including a first-line ARV, efavirenz, are due to begin. The manufacturing plant, in the northern city of Arusha, has been established under the WTO's Trade Related Aspects of Intellectual Property Rights Agreement, which enables the world's least developed countries to produce essential drugs without introducing pharmaceutical product patents until 2016. The manufacturing facility was set up via a US$6.6mn grant from the EU, a US$600,000 grant from German medical aid organisation Action Medeor and a US$963,000 investment from local company Tanzania Pharmaceuticals Industry, which the government has a 40% stake in.
BMI Economic View: We believe that real GDP growth in Tanzania will slow to 5.5% in 2012, down from an estimated 6.2% in 2011, as high inflation and weakness in the tourism sector weigh on the headline number. We believe that investment will be a bright spot as Chinese-funded infrastructure projects get under way and that Tanzania's resilient consumer will once again hold up relatively well. The major risk to the economy comes from weather, as poor rains would render our forecasts too optimistic.
BMI Political View: Tanzania's constitution-making process continues to be a volatile affair, and we maintain our view that this is an illustration of the transforming political landscape. Although the ruling Chama Cha Mapinduzi's dominance is entrenched enough that a transfer of power is unlikely at the next election in 2015, we believe that Tanzania is on the path towards becoming a true multi-party democracy, as the opposition party Chadema continues to make headway.
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