New market study, "South Africa Pharmaceuticals & Healthcare Report Q2 2014", has been published

South Africa is the best investment opportunity for multinational drugmakers seeking to enter the African market - boasting the largest medicines market on the continent and poised for high single-digit growth over the next decade. This quarter highlighted issues surrounding intellectual property protection, in which the Innovative Pharmaceutical Association SA (IPASA) was implicated in the leakage of draft response campaigning against proposed changes to South Africa's intellectual property, and the impact of local currency depreciation - positive for local drugmakers export revenues but negatively impacting production costs and profits under the current pricing system.

Full Report Details at
- http://www.fastmr.com/prod/807750_south_africa_pharmaceuticals_healthcare_report_q2.aspx?afid=303

Headline Expenditure Projections

* Pharmaceuticals: ZAR34.01bn (USD3.52bn) in 2013 to ZAR37.53bn (USD3.51bn) in 2014; +10.3% in local currency terms and -0.5% in US dollar terms. Forecast broadly in line with Q114.
* Healthcare: ZAR302.34bn (USD31.33bn) in 2013 to ZAR328.17bn (USD30.67n) in 2014; +8.5% in local currency terms and -2.1% in US dollar terms. Forecast broadly in line with Q114.

Risk/Reward Rating

Despite the country's low risk profile being more favourable than its rewards profile, South Africa has strong longer-term commercial potential because of its sizeable population and economic development. South Africa is one of the most promising markets in the entire MEA region. In Q214, South Africa's score has improved to 57 out of 100, having moved up two places in the matrix from fifth to third.

Key Trends And Developments

March 2014

Aspen Pharmacare reported strong growth in revenues and profits for the six-month period ending December 2013, as it began to recognise revenues and earnings from newly acquired divisions. The weakening of the South African rand spurred growth both in the Asia Pacific region and internationally. Brand recognition gained from the newly acquired product portfolios of Nestle, MSD and GSK helped to stabilise margins as domestic performance faced significant headwinds. We believe Aspen's management has been prudent in its acquisitions and capital expenditure, and we hold a bullish view on the company's medium-term outlook.

The Department of Health extended the February 15 deadline for medical stores and retailers to put disclaimers on their complementary medicines products. The MCC gave a three-month deadline to all manufacturers to introduce labels warning consumers that their products have not been evaluated by the MCC and are not meant to diagnose, treat or prevent a disease. The requirement is part of new regulations overseeing complementary medicines in the Medicines and Related Substances Act published on November 15.

February 2014

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