BMI View: Cambodia is a market with strong growth potential for pharmaceutical firms, given the many unmet medical needs. However, we highlight that such frontier markets are highly risky, given the lack of proper regulation, extensive bureaucracy and rampant corruption. As a consequence, firms looking to expand in these regions must contend with low or negative sales growth initially.
Headline Expenditure Projections
- Pharmaceuticals: KHR721.1bn (US$170mn) in 2012 to KHR812.5bn (US$190mn) in 2013; +12.7% in local currency terms and +11.2% in US dollar terms. Healthcare: KHR3262.7bn (US$780mn) in 2012 to KHR3582.4bn (US$850mn) in 2013; +9.8% in local currency terms and +8.4% in US dollar terms.
Risk/Reward Rating: Cambodia's Pharmaceutical Risk/Reward Rating (RRR) score for Q213 is unchanged from the previous quarter. This is also the case for all other countries in BMI's proprietary system that ranks pharmaceutical markets according to attractiveness to multinational drugmakers. A minor re-weighting of one of the RRR components is being implemented to improve the tool, and the adjusted scores for all markets will be published in the Q313 updates of the Pharmaceuticals & Healthcare reports. Cambodia has a RRR score of 33.5 out of 100, making it the least attractive pharmaceutical market in Asia Pacific.
Key Trends And Developments.
- In Feburary 2012, In an interview with local media, Phnom Penh Post, Benoit Martineau, head of Cambodia and Laos operations in France-based Sanofi, stated that the firm's plan to expand to all 24 provinces (since January 2013) in Cambodia is to have a 'dedicated local presence, develop products and ensure access for patients'. He maintained that Sanofi is 'very dedicated to the Indochina region', which is unsurprising given that Cambodia, Laos and Vietnam were part of the French colony historically.
- In January 2013, Vabiotech and Inviragen entered into a licensing agreement by which Vabiotech will acquire rights to Inviragen's proprietary Japanese encephalitis (JE) technology to produce a cell-derived vaccine. Under the terms of the agreement, Vabiotech may exclusively develop and commercialise a JE vaccine based on this technology in Vietnam, Cambodia and Myanmar. In exchange, Inviragen will receive certain development-based milestone payments from Vabiotech.
BMI Economic View: The Cambodian economy expanded by 7.3% in 2012 according to a statement made by Prime Minister Hun Sen, driven by agriculture, tourism, garment exports, and construction. The country's current growth boom is attracting interest from luxury brands, and we believe that the mediumterm outlook for the consumer is bright. However, a sharp downturn in loan growth, from its current breakneck pace, should see real GDP growth fall to 6.0% in 2013.
BMI Political View: Cambodia's exiled opposition leader Sam Rainsy is unlikely to be allowed to compete in the upcoming general election in July, despite international pressure on Prime Minister Hun Sen's government to allow his return. Hun Sen's grip on power will remain for the foreseeable future, and while this is positive for the business environment in the near term, current land concession policies are storing up political risks.