Uzbekistan. Pharmaceutical market development in Q4 2012

Risk-averse pharmaceutical, healthcare and medical device companies should avoid Uzbekistan. Authorities in the Central Asian country are looking to restrict imported products and boost local production. Regulations are opaque, the influence of the state on the private sector is considerable, the economy is susceptible to commodity shocks and the political outlook is uncertain. The fact that Uzbekistan’s largest privately-owned drug maker was recently seeking opportunities in Africa, which is predominantly a very low income region, underlines the limits of commercial promise in the domestic market.

Headline Expenditure Projections
Pharmaceuticals: UZS853.25 bn (US$498 mio) in 2011 to UZS993.00 bn (US$563 mio) in 2012; up 16.4% in local currency terms and 13.0% in US dollar terms. Forecast unchanged from Q3 2012.

Healthcare: UZS 4,080.86 bn (US$2.38bn) in 2011 to UZS 4,931.53bn (US$2.79 bn) in 2012; up 20.8% in local currency terms and 17.4% in US dollar terms. Forecast unchanged from Q3 2012.

Medical devices: UZS155.82 bn (US$91 mio) in 2011 to UZS179.45 bn (US$102 mio) in 2012; up15.2% in local currency terms and 11.8% in US dollar terms. Forecast unchanged from Q3 2012.Risk/Reward Ratings: Uzbekistan’s Pharmaceutical Risk/Reward Rating (RRR) for Q4 2012 is 39.6 out of 100, making the country the least attractive market in Central and Eastern Europe (CEE). Uzbekistan scores below the regional average for all indicators in the proprietary ranking system and this situation is unlikely to improve in the medium term. One point of consolation is that the country’s RRR score is unchanged from Q3 2012, while the regional average fell from 52.3 to 51.2.

Key Trends And Developments
In July 2012, UNICEF, the government of Uzbekistan and the EU signed a tripartite agreement to improve maternal and child health in the Central Asian country. The project will focus on improving the services provided to women before and during pregnancy, during childbirth and at all stages of child development. It will cost EUR5.7 mio (US$7.0 mio) and run for three years. This project highlights why Uzbekistan should be considered a developing country – it is still partially reliant on external assistance in the provision of fundamental healthcare services.

In May 2012, first quarter performance indicators for Uzpharmsanoat, the primary state holding company for the pharmaceutical sector, were released. Production increased significantly, some business units were not profitable, exports grew (albeit from a low base), numerous contracts were awarded, product development advanced, quality management systems progressed and more people were employed by the firm.

BMI Economic View: We anticipate Uzbekistan's economic growth trajectory to remain strong in 2012 and 2013 in spite of a mild slowdown in export growth. High prices for key commodity exports and continued public investment into strategic sectors will underpin robust growth in the Central Asian nation.We forecast real GDP growth at 7.8% in 2012 and 7.6% in 2013 down from an estimated 8.3% in 2011. BMI Political View: Increased cooperation with the US is likely to be a boon for Uzbekistan in the coming years, helping to counterbalance Russian influence in the region. Militarily, the government will benefit from increased counterterrorism capabilities. On the downside, lacking US pressure, Uzbekistan will be less likely to address its poor democratic and human rights record and its international isolation will continue.

Source: Business Monitor International