Zimbabwe's Pharmaceuticals and Healthcare Industry with Comprehensive Report, Q3 2008

Zimbabwe’s pharmaceutical market remains an extremely unattractive prospect due to ongoing

political and economic problems. Indeed, the problems breed uncertainty that makes long-term market forecasts challenging. BMI expects further slow deterioration of the market through to 2010. We believe that the market will continue to be propped up to a large extent by donations from international aid agencies, meaning that it has little further to fall. Having said this, recent threats to clamp down on international aid agency activity by the regime of President Robert Mugabe or the possible imposition of international sanctions backed by the US and UK could precipitate a further fall in the value of the pharmaceutical market.

Demonstrating the ongoing supply chain difficulties, in April 2008, Zimbabwe’s leading health insurance organisation Cimas suspended its HIV/AIDS drug benefits for those covered by the add-on chronic disease package, citing a shortage of antiretrovirals (ARVs). The insurer claimed it was unable to source ARVs from abroad due to a lack of foreign currency. Meanwhile, its local manufacturing partners had stopped producing the drugs due to pricing controls.

Such a situation is likely to have a serious adverse effect on the country’s HIV/AIDS burden. BMI’s Burden of Disease Database (BoDD) forecasts that the number of disability-adjusted life years (DALYs) lost to HIV/AIDS will increase by an average of 1.4% a year between 2007 and 2012 to reach 4.92mn in 2012.

Unsurprisingly, BMI rates Zimbabwe’s business environment as the least attractive of the 13 Middle East and Africa (MEA) pharmaceutical markets surveyed. The business environment has continued to deteriorate over the past year, with the international community, led by the US and UK, looking seriously at imposing sanctions on the Mugabe regime. Meanwhile, in October 2007, Zimbabwe’s parliament passed the Indigenisation and Empowerment Bill, which aims to increase local ownership of companies.

The bill extends and formalises the controversial land reforms pursued by the Mugabe regime in the agricultural sector. It requires that at least 50% of shares in the manufacturing industry be owned by Zimbabweans. However, uncertainty again plagues the proposals, with no clear timescale set out for the implementation of the bill’s objectives.

In April 2008, Indian backer Shreya Life Sciences divested its 40% stake in CAPS Pharmaceuticals (co-owned with CAPS Holdings) to an unnamed foreign investor. CAPS Holdings is continuing its investment in capital projects. However, the loss of its Indian backer is likely to make it challenging to obtain hard currency to fund such activities.