2011-05-03 - Fast Market Research recommends "Cambodia Pharmaceuticals & Healthcare Report Q2 2011" from Business Monitor International, now available
BMI View: Cambodia will remain one of the world's marginally important regional pharmaceutical markets, not least due to widespread corruption and recently heightened political tensions. Poor infrastructure and the lack of public funding for healthcare and pharmaceuticals also combine with low per capita incomes and the challenging intellectual property (IP) environment to create a largely unattractive pharmaceutical market for most
foreign players. Counterfeiting, despite being addressed by the authorities, will remain a major issue and will stop multinationals entering the market, even though pharmaceutical sales values are expected to continue posting steady growth in the coming years.
Headline Expenditure Projections
* Pharmaceuticals: KHR812.3bn (US$194mn) in 2010 to KHR872.2bn (US$211mn) in 2011; +7.4% in local currency terms and +8.9% in US dollar terms. Local currency forecast down moderately from Q111 due to exchange rate factors.
* Healthcare: KHR3,037bn (US$725mn) in 2010 to KHR3,256bn (US$789mn) in 2011; +7.2% in local currency terms and +8.8% in US dollar terms. Local currency forecast down moderately from Q111 due to exchange rate factors.
* Medical devices: KHR47.2bn (US$11mn) in 2010 to KHR50.1bn (US$12mn) in 2011; +6.2% in local currency terms and +7.7% in US dollar terms. Forecast lowered through analyst intervention.
Business Environment Rating: In our latest quarterly Pharmaceuticals & Healthcare Business Environment Ratings (BER) for the Asia Pacific, Cambodia's score remained the same. The country, therefore, again ranks last of the 17 pharmaceutical markets surveyed in the region, with its situation unlikely to improve in the coming months. Failure to address issues such as widespread corruption will bode poorly for long-term growth and development. The low per capita spending on pharmaceuticals will also continue to be a major stumbling block, especially as the government's involvement in healthcare funding is considerably lower than the role played by out-of-pocket payments.
Key Trends & Developments
* The Cambodian health ministry has increased surveillance and seizure efforts to fight substandard and counterfeit medicines in the country. The move came after the identification of fake products carrying package labels from Thailand and China, according to a statement from the US Pharmacopeial Convention (USP), made in February 2011.
BMI Economic View: We believe that the impressive rebound in Cambodian trade exports following the global financial crisis will fade going into 2011. Cambodia's heavy reliance on US and EU demand indicates a vulnerable trade structure that will be susceptible to a slowdown in external demand in 2011. As such, we are forecasting a slowdown in trade export growth. We also expect trade imports growth to slow, resulting in a widening of the trade deficit from an expected 21.3% of GDP in 2010 to 23.4% of GDP in 2011. On a more positive note, the Cambodian government is fully aware that further diversification of the country's trade structure will help reduce the volatility of trade exports over the coming years, although actual changes in this direction may take some time to implement.
BMI Political View: A military conflict caused by border disputes between Cambodia and Thailand is putting bilateral relations and regional security in a delicate situation. Although we believe that the conflict is unlikely to escalate into an all-out war, we note that a resolution on territorial disputes is unlikely to be achieved in the short to medium term. Moreover, a prolonged military conflict will have a detrimental impact on Cambodia's tourism sector (which is being heavily promoted by the government) and the economy, as well as specifically on its investment attractiveness to foreign companies. On a positive note, a series of bilateral meetings were held recently between officials from Cambodia and Vietnam, with the intention of boosting cooperative ties between the two countries, especially in fields such as trade, education and training, security and defence, politics and diplomacy.
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