Summary
2013 Iraq Health Care Sector Outlook is the single, most
comprehensive, insightful and accurate source of reference on the health care
industry in Iraq.
The report provides unparalleled insight into one of the lesser known emerging
markets for Health Care in the Middle East. It shows that total health care
spending in Iraq will increase to between US$10-12 billion a year by 2014, and
that privatization of the health care system will begin to emerge as
restructuring of state owned enterprises gathers steam.
The report outlines the key market, political, economic, institutional and
regulatory trends affecting the health care and pharmaceuticals industry in
Iraq, providing core data and investment trend analysis in relation to existing
and medium-term investment dynamics.
The report accounts for the entire health and pharmaceutical industry in Iraq,
assesses the current commercial and competitive environment, forecasts health
care market prospects, and projects key macroeconomic, demographics and health
indicators. It reviews major regulatory trends and the operational environment,
accounting for political, security and commercial conditions, business
registration, licensing, acquisitions and expansion laws, government procurement
procedures, foreign investment and trade controls, taxation and financing
issues, and labour market and infrastructure regulations. It offers detailed
analysis and a medium-term health-financing outlook, and digests the
government’s long-term vision in reforming the sector. The report has been
designed to inform strategic investment decisions, and allows clients to:
- Get to grips with the current state of health care services in Iraq and the
scope for future growth;
- Identify the major areas of government and private sector investment in primary,
secondary and tertiary care systems;
- Compare growth prospects in key sub-sectors and against regional competitors to
identify best business avenues;
- Adopt an adequate approach to working with relevant governorate and
central-level authorities;
- Enhance business and joint venture planning;
- Account for current and future political and investment risks; and,
- Identify emerging business opportunities as they come on line.
EXECUTIVE SUMMARY
GEOPOLICITY BUSINESS INTELLIGENCE UNIT (BIU) OVERVIEW
The health system in Iraq, led by the Ministry of Health, is experiencing a
period of substantial growth, accompanied by restructuring in support of
improved service provision. Bolstered by strong GDP growth outturns (forecast at
14.7% in 2013), budgetary appropriations for health have increased substantially
(US$6 billion in 2012), leading to increased per capita health spending to over
US$247 per annum. While still substantially below regional comparators, the
planned tripling of oil production between 2012 and 2017/18 (to 8-‐8.5 million
barrels per day (bpd)) will precipitate substantial additional funding for
healthcare, which is likely to top US$10-12 billion by 2014, once private
financing is included.
Although still relatively high, an easing political and security risks
perception, particularly in the South of the country and in Iraqi Kurdistan,
nurtures substantial upside gains for international investors seeking to support
improved public and private health provision over the medium to longer term. The
Prime Minister’s plans for restructuring and corporatization of state owned
enterprises, alongside progressive gains in the ease of doing business make Iraq
an attractive investment destination for investors seeking a long-‐term
footprint. Opportunistic gains also exist.
GOVERNMENT OF IRAQ VISION
The national healthcare vision focuses heavily on the primary health care model,
the integration of all promotive, preventive, curative and rehabilitation
services, and on the coordination between the various tiers of the delivery
system through a well-organized referral system. Sector policy and strategy
aims to address priority sector and public health problems, supported by
evidence from statistical and epidemiological data.
ECONOMIC GROWTH AND THE NATIONAL BUDGET
Iraq is going through an intense period of growth that will last a decade. Real
GDP growth in
2012 is expected around 10.2%, increasing to 14.7% in 2013. Given the commitment
of the Government of Iraq (GOI) to almost triple oil production by 2017, medium
term growth could be sustained at this level and even reach 15-18%.
As oil production increases from 2.9 million bpd in 2012 the draft budget for
Iraq for 2013 is set to increase to US$115 billion (ID 138 trillion), an 18%
increase over 2012. With oil production likely to reach 8-8.5 bpd by 2017, the
national budget would increase to more than US$250 billion in 5 years.
With 30% of the national budget already dedicated to capital spending, the
Government has earmarked between US$250 to US$275 billion for infrastructural
investments over the next 5 years, requiring pubic-‐private-‐partnership
arrangements, of which a substantial share could be targeted for the health
sector.
HEADLINE EXPENDITURE PROJECTIONS
Public spending through the central Ministry of Health (MOH) increased from
US3.8 billion in
2010, to US$4.5 billion in 2011 and US$6 billion in 2012 (following the second
appropriations bill). Kurdistan Regional Government (KRG) spending totaled
US$715 million in 2011. Health spending, based on the current sector percentage
rule and GDP growth forecasts, could increase to US$9 billion by 2014 and, based
on regional cross-‐national benchmarks (US$636 average), could reach US$15-‐20
billion within a decade.
The majority of public spending goes to pharmacies, which is US$1,174,955,249
(ID 1,365,298 million) or 26.6% of total health care expenditure in 2010;
followed by Primary Healthcare Centers (PHC) at US$1,113,629,087 (ID 1,294,037)
million or 25.2% of the total expenditure. Further, 22% of expenditure is spent
on administration costs and salaries, 14.6% on general hospitals and 10.3% is
incurred at private pharmacies. In general, health care expenditure in Iraq is
primarily spent on curative care (more than 37%). A significant share (36.8%) is
spent on pharmaceuticals dispensed on outpatient care.
Public funding accounted for 80.5% of health spending in 2010. Private spending
was 18.7% and international donor support was 0.8%. Out of pocket expenditure by
citizens accounts for 19% in 2011. As noted in Iraq Household Socio-‐Economic
Survey (IHSES) 2007, 18% of out-‐of-‐pocket direct spending is utilized by MOH
hospital facilities, with around 34% accounting for private physicians, and 39%
for pharmaceuticals. Transportation absorbs 9% of out-‐of-‐pocket health
spending.
The health workforce employed by the public sector consumed 47% of MOH budget in
2010.
Trend analysis has shown that share of health workforce has only exceeded 50% of
MOH budget in 2004-5. Comparing the Electronic Medical Record (EMR) with
similar countries elsewhere, the share of health workforce remains low compared
to an average of 50-70%. According to MOH (federal) Annual Report of 2010, Iraq
has 206,746 health workers. The ratio of Human Resources for Health (HRH) to
population is 6.28HRH/1,000 population.
TRENDS AND FORECASTS
The private insurance market is still nascent in Iraq, and alongside ICT,
infrastructure and human resource development gaps, considerable investment in
market-based solutions is required. An increasing market demand for medical
appliances and equipment, laboratory equipment and consumables, hospital
management, pharmaceuticals, and multi-disciplinary technical training accounts
for an estimated industry growth of 61% for the pharmaceutical sub-sector and
40% for related equipment and technologies within the past five years.
The public and private health care system in Iraq is one of the fastest growing
in the world, and although Iraq is not a market economy, the Prime Ministers
Advisory Commission (PMAC) and Task Force on Economic Reforms (TFER) have
established working groups on the restructuring of State Owned Enterprises (SOE).
The eventual restructuring or corporatization of the State Company For Drugs And
Medical Appliances (KIMADIA) and the State Company for Drugs, Industry and
Medical Supplies (SAMARRA) will begin. With considerable black-‐market trade
occurring in both real and counterfeit pharmaceuticals, greater state regulatory
enforcement is urgently required.
POLITICAL ECONOMY OUTLOOK
Challenges undoubtedly remain, internally, and with local elections planned for
January 2013, sectarian violence seems set to continue, through less so in the
south. With relations between political factions breaking down in 2011, and with
the spillover effects from Syria and potentially Iran, Iraq will struggle to
balance interests between Washington DC and Tehran. Unresolved issues such as
centralization of power, Sunni community grievances and tensions with KRG
underline continued volatility albeit against a growth tide that cannot be
ignored.
Company Mentioned in the Report
• State Company For Drugs And Medical Appliances (KIMADIA)
• State Company for Drugs, Industry and Medical Supplies (SAMARRA)
• State Company for Drugs Industry and Medical Appliances ( NINEWA)
• GlaxoSmithKline
• Advance Scientific Company
• Al Assad Scientific Bureau
• Al Ahlaf Trading Company
• Alyara Company
• Enana Company
• Issam Bureau Group
• Kasim Irzzouki Drug Scientific Bureau
• Lagash Scientific Group
• Modern Drug Industries
• Pioneers Pharma
• HT Labor + Hospitaltechnik AG
• Hazha Company
• United Medical Company
• Al Nabeer Co. Ltd Medical System Services
• Ermedi International of France
• Al Rawi Group of Companies
• Al Bihar Medical Trading Company
• Diar Baghdad Company
• OMA Company
• Iraqi Biotechnology Company Ltd.
• Kardokh Company
• Medical Resource Center
• HOZ Company Ltd.
• Shams Anahar Company
• Sorima Hospital Development of Italy
• United Scientific Enterprises
• Viessmann Technologies GmbH of Germany
EXECUTIVE SUMMARY 1
MARKET SNAPSHOT 3
Market Characteristics 3
Health Sector Governance 5
Health Financing 9
Regulatory Regime 11
Registration 12
Licensing 12
Quality Control 12
Promotion 13
Clinical Trials 13
Selection 13
Procurement 13
Distribution 14
Competitive Landscape 15
State Owned Companies 16
Private Sector Operators 16
INDUSTRY TRENDS 19
Health Sector Policy and Reform 19
INDUSTRY OUTLOOK 20
New Service Delivery Model 20
Investment Trends 21
Pharmaceuticals 24
Physical Infrastructure 24
Management Information Systems 24
Equipment 25
Human Resources 25
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