Facing challenges that have perennially constrained Zimbabwe’s economic activity continues to limit the country’s pharmaceutical and healthcare market growth, according to Fitch Solutions.

These challenges include the chronic scarcity of hard foreign currency, periodic shortages of basic goods and prices rising faster than official inflation figures suggest, remain in place even after former president Robert Mugabe’s departure.

According to estimates, Zimbabwe’s economy is expected to grow in 2022 at a GDP of 3.7 per cent, 1 percentage point below that of 2021. This is both below a 5.5 per cent growth estimate by the Reserve Bank of Zimbabwe (RBZ) for 2022, and the 2010-20 average of 4.7 per cent, Fitch’s Country Risk forecasters noted.

“Zimbabwe’s weak economy will therefore continue to impact healthcare spending, as both household incomes and government tax revenues remain low. High and unpredictable inflation will also continue to impact private healthcare companies, offering an unstable pricing environment and uncertainty in expected profits from investments.”
Fitch

Elevated Inflation to Impact Pharmaceutical Sales

Fitch forecasts Zimbabwe’s inflation to average 42.5 per cent in 2022. Although this will reflect a huge fall from a recent peak of 837.5 per cent year-on-year in July 2020, and from 60.7 per cent year-on-year in December 2021.

Furthermore, rising inflationary pressures in the country will therefore place increases on pharmaceutical prices and aggravate funding and affordability issues in the country’s healthcare sector.

As a result, Zimbabwe’s pharmaceutical market is forecast to realize mid-single digit growth in US dollars over the first five years.

“We estimate that Zimbabwe’s pharmaceutical market will grow by a CAGR of 5.3% in US dollar terms, to reach USD0.7bn by 2026. Over the next ten years, we forecast growth of 5.5%, which will take the market to USD1.0bn by 2031.”
Fitch

According to Fitch, Zimbabwe will remain a less attractive destination for innovative drugmakers over the coming years despite efforts to boost local manufacturing.

“Zimbabwe’s weak economic environment will therefore continue to disincentivize investors from entering the market despite efforts by the government to boost local production, as reflected in the newly launched Pharmaceutical Manufacturing Strategy.”
Fitch

This is further highlighted in the country’s low score of 18.8 out of 100 in Fitch’s Innovative Pharmaceuticals Risk/Reward Index (RRI), which quantifies and ranks a country’s attractiveness in terms of its pharmaceuticals industry.

Risk/Reward Index low

The country’s score of 2.8/100 drags down its overall score in the index and thus heightens the Country’s Risks. Zimbabwe’s Country Risks score is among the lowest in a region, where the regional average is 23.5, with only Sudan scoring worse for this indicator. A lower score on the index means higher risk.

Aside economic challenges, Fitch highlights other weak fundamentals in Zimbabwe including its demographic makeup which is not conducive to patented medicine sales; the underdeveloped state of rural healthcare infrastructure which puts significant limits on access to pharmaceuticals for Zimbabwe’s rural poor.

Others include the lack of government commitment to improving the healthcare service; Zimbabwe’s large low-income youth population; and the country’s high communicable disease burden which limits demand for innovative medicines.