New Market Report: Sri Lanka Pharmaceuticals & Healthcare Report Q2 2013

Economic growth will aid the development of Sri Lanka's pharmaceutical and healthcare sectors. We believe the affordability of, and fiscal contributions to, healthcare service provision will rise.

Headline Expenditure Projections

* Pharmaceuticals: LKR59.86bn (US$469mn) in 2012 to LKR68.50bn (US$540mn) in 2013; +14.4% in local currency terms and +15.2% in US dollar terms.
* Healthcare: LKR250.92bn (US$1.97bn) in 2012 to LKR281.13bn (US$2.22bn) in 2013; +12.0% in local currency terms and 12.7% in US dollar terms.

Risk/Reward Rating

According to our Q213 regional matrix, with a score of 40.2 out of 100.0 Sri Lanka is ranked 15th out of the 18 markets surveyed - above Pakistan, Bangladesh and Cambodia. Sri Lanka's rewards and risks profiles are relatively evenly balanced, Low per capita expenditure on drugs and the modest overall market size are two of the key factors contributing to its low ranking.

Full Report Details at
- http://www.fastmr.com/prod/589192_sri_lanka_pharmaceuticals_healthcare_report_q2.aspx?afid=301

Key Trends And Developments

In February 2012, infection control product manufacturer Ansell's recently constructed 16,000 square foot state-of-the-art R&D facility in the Biyagama Export Zone outside Colombo, Sri Lanka, began operations. In January 2013, the Sri Lankan Health Ministry alerted Indian health authorities to contaminated injection vials that were imported into the country. The notification was sent after a glass piece was detected inside an antibiotic vaccination vial. Following the incident, the Sri Lankan health ministry withheld the entire stock of Meropenem, which is designed to treat bacterial diseases. In December 2012, nearly 600 vials used for injections were also removed from the Kalubowila Teaching Hospital after glass pieces were detected.

BMI Political View: We have long cautioned that the political unassailability of the ruling United People's Freedom Alliance (UPFA) greatly increases the risk of government overreach, which could then lead to a deterioration of the country's political risk profile. Recent developments, such as the highly controversial impeachment of the country's chief justice, have only bolstered our view that the UPFA's dominance, while positive in terms of legislative effectiveness, could ultimately damage Sri Lanka in the long term.

BMI Economic View: In line with our below-consensus outlook for the Sri Lankan economy, GDP figures for Q312 showed real GDP growth slowed considerably, to 4.8% year-on-year (y-o-y). We do not see economic growth turning up until H213 at the very earliest, hence our projection for full-year real GDP growth to remain flat at 5.4% this year.

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