Headline Expenditure Projections
- Pharmaceuticals: PKR209.43bn (USD2.06bn) in 2013 to PRK231.22bn (USD2.29bn) in 2014; +10.4% in local currency terms and +11.0% in US dollar terms. Forecast upwardly revised in US dollar terms.
- Healthcare: PKR581.62bn (USD5.73bn) in 2013 to PKR657.74bn (USD6.51bn) in 2013; +13.1% in local currency terms and +13.7% in US dollar terms. Forecast in US dollar terms upwardly revised from previous quarter.
Risk/Reward Ratings: We have revised Pakistan's Pharmaceutical Risk/Reward Rating (RRR) score for Q314 slightly downwards to 39.3 out of 100. As a result its place in our rankings has fallen to 16th, from 15th previously, out of the 19 markets in the Asia Pacific region.
Key Trends & Developments
Mian Mujtaba Shuja-ur-Rehman, the finance minister of Punjab, Pakistan, announced that the government plans to spend PKR102bn (USD958.8mn) on primary and protective healthcare in the province in 2014. The protective healthcare programmes will save children from epidemic, communicable and non-communicable diseases, according to Shuja-ur-Rehman. The government will launch a comprehensive mother and child healthcare programme worth PKR2bn (USD18.8mn) focussing on the health of infants and mothers. The government is also appointing gynaecologists at public sector hospitals in the province, Shuja-ur-Rehman added. It will also issue health cards worth PKR4bn (USD37.6mn) to individuals on low incomes.
Increasing diabetes prevalence is posing challenges for policymakers in Pakistan. More than 250 people die in the country every day due to diabetes. More than 6.7mn people are currently estimated to have diabetes, and it is expected that this number will double over the next 25 years. Of all people with diabetes, only about 50% are diagnosed. Of those diagnosed, 50% receive treatment, with only 30% of diagnosed cases achieving treatment targets. Danish drugmaker Novo Nordisk is investing in several training and education programmes in Pakistan in an effort to improve diabetes awareness. CEO Lars Rebien Sorensen said that he expects 'a simmering of interest for Pakistan among Danish businesses. After Pakistan obtained GSP Plus status, I am also confident that more Pakistani companies will make inroads in the Danish market', reports The News.
The Japan International Cooperation Agency (JICA) granted aid worth PKR1.38bn (USD13.84mn) to Pakistan's Sindh Government Child Health Institute, reports the Express Tribune. The grant will allow the Sindh government to expand the institute's facilities from 40 to 250 beds, according to JICA chief representative Mitsuyoshi Kawasaki. The grant will also help the procurement of 500 items of medical equipment and offer advanced paediatric care along with establishing a strong patient referral system in Karachi, Kawasaki said. The institute is situated near Nagan Chowrangi in Pakistan and currently addresses the needs of more than 1,000 patients. Hiroshi Inomata, the Japanese Ambassador to Pakistan, inaugurated the upgrade work on March 18.
BMI Economic View: The appreciation of the Pakistani rupee since December 2013 has been nothing short of spectacular. The currency has strengthened by over 10% from the December trough, and while there have been some genuinely positive signs on the macroeconomic front, the unprecedented move may also have stemmed from the State Bank of Pakistan's (SBP) desire to send a message that the rupee is not a one-way losing bet. However, we expect the recent strength to subside over the coming months, and forecast the unit to weaken back to PKR100.00/USD over the coming months.
BMI Political View: Pakistan's recent USD1.5bn 'gift' from Saudi Arabia has raised a number of questions regarding the implications for the former's stance on Syria, and the Iran-Pakistan (IP) gas pipeline project. With the Pakistani economy in a fragile state, and in great need of external financing, the grant was difficult to refuse, but is likely to lead to a further deterioration of relations with neighbouring Iran.
Pakistan remains one of the least attractive markets in the Asia Pacific region to pharmaceutical and healthcare investment. We project that a lack of government support for pharmaceutical research and development, and an ineffective regulatory regime, will continue to deter multinational firms over the long term. We note that, with the non-communicable disease burden - particularly that of diabetes - set to rise, considerable investment in healthcare will be required to bring standards in line with the rest of the region.