Qatar Pharmaceuticals and Healthcare Report Q1 2013

BMI View: According to recent reports in The Gulf Times, Qatar will have four new drug manufacturersby the end of Q113. The drugmakers will reportedly import their raw materials and produce tablets,syrups and injectables. It is anticipated the drug manufacturers will (in our view eventually) help curbreliance on imports and lower prices of retail medicines in the country as a result of increased localcompetition, according to Dr Aisha al-Ansari of the Supreme Council of Health Pharmacy and DrugControl Department (SCH). If the production facilities are opened on schedule, we will revise ourforecasts accordingly. Generally speaking, however, we expect Qatar to remain greatly reliant onimported medicines, given the high level of consumption of patented drugs.

Headline Expenditure Projections

Pharmaceuticals: QAR1.32bn (US$362mn) in 2011 to QAR1.38bn (US$379mn) in 2012;+4.7% in local currency and US dollar terms. Historical figures adjusted to reflect newimport data.

Healthcare: QAR10.54bn (US$2.89bn) in 2011 to QAR11.40bn (US$3.13bn) in 2012; +8.2%in local currency and US dollar terms. Forecast slightly lower from Q412 on account ofmacroeconomic factors.

Medical devices: QAR1.02mn (US$279mn) in 2011 to QAR1.15mn (US$317mn) in 2012;+13.6% in local currency and US dollar terms. Forecast slightly lower from Q412 on accountof macroeconomic factors.

Risk/Reward Rating: In BMI's Q113 Risk/Reward Ratings (RRRs) for the Middle East and Africa(MEA) region, Qatar remains in fourth place, out of the 30 countries assessed. Its composite score - at anunchanged 56.2 - comprises a more favourable risk component. The country's longer-term rewards areweighed down by factors such as its small population and a maturing pharmaceutical market.

Key Trends And Developments

A report has found that Qatar and Saudi Arabia lead in the healthcare interiors contracting andfit-out sector, with investments of US$192mn and US$145mn respectively in 2012. The reportby Ventures ME showed that the two countries have surpassed investments of US$119mn andUS$13mn in the sector by the UAE and Oman respectively. The report also found that projectsworth US$2.4bn in the Qatari healthcare market are likely to be completed by end-2012, therebymaking the country the largest spender on healthcare in the GCC. This represents a share of 40%of the total GCC medical projects expected to be completed in 2012.

BMI Economic View: Qatar faces few significant fiscal risks in the near term, even though we seeincome from oil and gas exports as likely to be more than capable of financing Doha's spending plansover the coming years. However, we view the authorities' goal of fully financing its budget from nonhydrocarbonrevenues by 2020 as unrealistic, and expect the country to remain dependent on oil and gasincome for the foreseeable future.

BMI Political View: Qatar's Emir Sheikh Hamad bin Khalifa al-Thani recently called for Palestinianunity during a landmark visit to Gaza. The visit is the first by a head of the state since Hamas militantsseized the territory five years ago. The Emir urged the Hamas and rival Palestinian group Fatah toreconcile. He also pledged US$400mn for building projects in the Gaza Strip. The visit shows that Gazais not alone, according to Hamas Prime Minister Ismail Haniya, adding that Israel's economic andpolitical blockade of Gaza had been broken by the trip.