Economy, Business And Markets

BMI Upbeat About Iran Medical Devices Market

BMI Upbeat About Iran Medical Devices MarketBMI Upbeat About Iran Medical Devices Market

The Iranian medical devices market will register a compound annual growth rate of 15.4% in local currency terms during 2014-19, taking expenditure from 22,832.0 billion rials in 2014 to 46,628.6 billion rials in 2019.

Excerpts from the latest report of Business Monitor International’s forecasts on Iran’s medical devices market are presented below:

The CAGR will be lower than the 2009-14 CAGR of 27.9%, when very high growth rates were recorded in 2013-14 as the rial depreciated sharply against the US dollar.

Iran’s agreement with the P5+1 countries over its nuclear program will result in the removal of almost all sanctions on Iran in 2016. This will ensure that the country emerges from recession, though it will not presage rapid economic growth.

Instead, the sustained decline in oil prices over the coming years will force the government to cut current spending and investment in the country’s infrastructure sector, which will result in slow expansion of private consumption and fixed investment.

Likewise, Iran’s lack of investment over the past decade will weigh upon growth and this overall economic weakness will impact upon medical devices consumption.

The BMI has also considered the burden of diseases, healthcare access, import performance, market barriers and company activities to calculate its forecasts.

The group forecasts that the market will expand by a 2014-19 CAGR of 4.7% in US dollar terms, down from a 2009-14 CAGR of 5.6%, which should see it rise from an estimated $883.9 million in 2014 to $1,110.2 million in 2019.

The much lower US dollar growth rate reflects the continued depreciation of the rial that is forecast over the next five years.

  Structural Trends

Iran’s economy will see a substantial uptick in growth in the coming years, as a result of the removal of sanctions.

Although three years of recession will end, a long-lasting boom is still a long way off, given structural issues in the economy, affected by low oil prices and a previous lack of investment.

Nevertheless, Iran is the fifth largest market in the Middle East and Africa region. Health expenditure in local terms continues to increase year-on-year due to the Iranian government’s commitment to make investment in the sector, as the establishment of a growing number of hospitals and healthcare centers is projected in the development plans.

Likewise, population increase, a changing epidemiological profile, low domestic production of hospital consumables and a proportionally low per capita expenditure on medical devices all represent further opportunities for market expansion.

The rapid reopening of the UK Embassy in Tehran indicates the speed with which European states are seeking to establish diplomatic and economic relations with Iran post-sanctions, with Chinese, Russian and European companies expected to begin accessing the Iranian market from March 2016.

However, due to political pressure, the US remains the only major western power without an official representation in Iran, meaning US companies will be among the last to reenter the Iranian market.

  Annual Medical Device Imports

In local currency terms, imports rose by 57.7% to 20,805.1 billion rials in 2014. Imports have grown positively but fluctuated in recent years. In the 2009-14 period, imports rose by a CAGR of 28.7%. By product area, 2009-14 CAGRs ranged from 41.6% for patient aids to 16.9% for diagnostic imaging.

In US dollar terms, imports grew by 9.8% to reach $805.4 million in 2014. Imports have fluctuated in recent years. The CAGR for the 2009-14 period was 6.3%. By product area, the 2009-14 CAGRs ranged from 16.9% for patient aids to -3.5% for diagnostic imaging.

In 2014, the leading supplier was the Netherlands, providing $179.3 million, equal to 22.3% of the total shipped. Other leading suppliers included Germany (15.2%), China (11.2%) and South Korea (8.4%). The EU-28, as a whole, accounted for 64.2% of total imports in 2014.

  Annual Medical Device Exports

Iran is not a major exporter of medical devices. In local currency terms, exports totaled 332.4 billion rials in 2014.

The market has fluctuated in recent years, recovering from a 67.6% contraction in 2012, to grow by 44.8% in 2013 and 108.8% in 2014. The CAGR for 2009-14 was 24.4%.

In US dollar terms, exports grew by 45.4% in 2014, recovering from a previous 1.7% contraction in 2013, reaching $12.9 million. Exports had a 2.7% CAGR during 2009-14.

In 2014, the leading destination was Australia, with $2.1 million (16.1% of the total), followed by South Korea with $1.9 million (14.4%).

Ireland was the leading destination from the EU-28, and third overall with 9.8%. Other leading destinations included Poland (7.9%) and Germany (7.8%). Overall, the EU-28 represented 44% of the total.