Angola Pharmaceuticals and Healthcare Report Q1 2013

BMI View: Angola’s general election in late August 2012 brought few changes to the country’s politicalscene, with incumbent President Dos Santos securing a comfortable victory. Fears of civil unrest wereunfounded, and for current and potential investors, Dos Santos’ re-election will ensure political stabilityand continuity. Consequently a ‘business-as-usual’ attitude exists. The election results have not alteredour market forecasts for Angola’s healthcare and pharmaceutical market. While we expect that there willbe an increase in public spending on healthcare initiatives in the short term as the government attemptsto fulfil electoral promises, this will be short lived. Angola relies on international investment to fundmuch of its healthcare development, with Cuba an important contributor, as well as internationalagencies, such as Unicef, which funded a tetanus vaccination campaign in July 2012. Angola is burdenedby both communicable and non-communicable diseases.

Headline Expenditure Forecasts

Pharmaceuticals: AOA26.78bn (US$286mn) in 2011 to AOA30.53bn (US$325mn) in 2012; +14.0% in local currency and +13.9% in US dollar terms.

Healthcare: AOA479.95bn (US$5.12bn) in 2011 to AOA587.26bn (US$6.26bn) in 2012; +22.4% in local currency and +22.2% in US dollar terms.

Medical Devices: AOA19.06bn (US$203mn) in 2011 to AOA22.79mn (US$243mn) in 2012; +19.6% in local currency and +19.5% in US dollar terms.

Risk/Reward Rating: Angola scores 34.8 out of 100 in the Q113 Pharmaceutical and HealthcareRisk/Reward Ratings (RRRs) and ranks 26th out of 30 in BMI’s Middle East and Africa (MEA) regionalratings. This is below the regional average of 44.2. Angola has below average scores in all categories,with the exception of country rewards, for which it has a score of 63 out of 100.

Key Trends And Developments

In September 2012 the Ministry of Health ordered a ban on the use of injectable ciprofloxacin,manufactured by China’s Jiangsu Kangao Pharmaceutical, because of variations in the drug’sfeatures. Authorities in Malange withdrew two tonnes of the drug from sale in October 2012.

Angola hosted its first National Conference on Traditional Medicines in August 2012.Participants recommended the ‘urgent’ approval of a national policy on the use of traditionalmedicines and complimentary practices.

The government plans to start a national pre-elimination of malaria in the country in 2015. It willcooperate with Namibia to lower the incidence of the disease.

BMI Economic View: Angola’s economy is booming, with BMI forecasting just under double-digitGDP growth of 9.9% in 2012 and similar amounts for 2013. A rebound in oil exports is bolsteringAngola’s economy, and given that 2012 is an election year, public spending is also increasing (even if itis only in the short term). Much of the wealth generated by oil has not brought benefits to the majority ofAngolans, however, with youth unemployment a concern.

BMI Political View: There were few changes on Angola’s political scene following general elections onAugust 31 2012. Despite some claims of irregularities, President Dos Santos obtained a healthy 72% ofthe vote and there was little civil unrest in the run up, or the aftermath, of the elections, suggesting thatAngolans are happy to continue along the same lines. For businesses, Dos Santos has made only minimalchanges to his cabinet, so Angola’s appeal to investors is unlikely to change as continuity reigns.