Qatar Pharmaceuticals and Healthcare Report Q3 2012

BMI View: Unlike other countries in the Middle East that have focused on encouraging pharmaceutical companies to establish manufacturing facilities, Qatar’s focus is on education and research. As the country lacks the freight and shipping infrastructure of the UAE it makes sense that it is not trying to compete in this area. Qatar lacks the domestic market to attract much investment but the government’s programme of investment has created the environment for high-value innovation.

Headline Expenditure Projections

Pharmaceuticals: QAR1.42bn (US$390mn) in 2011 to QAR1.55bn (US$426mn) in 2012; +9.1% in local currency and US dollar terms.

Healthcare: QAR10.49bn (US$2.88bn) in 2011 to QAR11.51bn (US$3.16bn) in 2012; +9.8% in local currency and US dollar terms. Historic data down on Q212 but forecast growth rate has been increased.

Medical devices: QAR1.02mn (US$279mn) in 2011 to QAR1.18mn (US$325mn) in 2012; +16.4% in local currency and US dollar terms.

Risk/Reward Rating: In BMI’s Q212 Risk/Reward Ratings (RRRs) for the Middle East and Africa (MEA) region, Qatar fell one place to fourth most attractive market out of the 30 countries assessed. Only the UAE scored higher for the risks category, which demonstrates Qatar’s favourable market and country structure, including a predictable operating environment and a sound economic base. On the other hand, its score for the rewards category is dragged down by a small and a relatively young population, despite high per capita spending on pharmaceuticals.

Key Trends And Developments

The Sidra Medical and Research Centre is supposed to be completed by the end of 2012. The hospital will include 388 beds, with infrastructure to enable expansion to 550 beds in subsequent phases and it will specialise in paediatric care. The purpose of the facility is not solely to be a healthcare facility; it will also be a world-class education and biotechnology research centre. This is how it can justify its enormous price tag, as Sidra as been funded by a US$7.9bn endowment from the Qatar Foundation, the largest such payment for a medical and research centre anywhere in the world. The building construction contract alone was worth US$2.3bn.

In February 2012, the respective Gulf Co-operation Council (GCC) authorities announced that they are looking to introduce a pan-regional IT system that will link the medical records of prospective workers and expatriates from 11 ‘labour exporting countries’ to the GCC Health Ministers’ Secretariat and to the ministries of health of the member states. This is part of the regional drive towards better integrating health information systems (HISs) to improve the quality and efficiency of patient care.

The Qatari German Company for Medical Devices (QGMD) more than tripled its net losses to QAR1.81mn in the first three months of 2012, mainly on higher costs. Sales were QAR1.66mn, whereas cost of sales stood at QAR2.13mn; thereby leading to a gross loss of QAR0.47mn, according to the financial statement.

BMI Economic View: We see Qatar’s economy growing robustly in 2012. Although hydrocarbon exports will slow, heavy government spending is likely to spur growth in private consumption and fixed investments. We are forecasting real GDP growth of 7.9% and 6.9% in 2012 and 2013 respectively.

BMI Political View: Qatar’s increasing role in MENA affairs raises risks that the country will become increasingly exposed to regional tensions. The country has risen to prominence for its assertive foreign policy since the outbreak of the Arab Spring. Through its leadership within the Arab League and the GCC, and direct military intervention in Libya, Qatar has emerged as a regional powerhouse and is widely acknowledged for its support of political reforms across the MENA region.