Industry Brief - Chinese Drug Firms Seek JV In Ethiopian Market

30 Oct 2015 Ethiopia Pharmaceuticals & Healthcare

News: A delegation of 10 major Chinese pharmaceutical and medical supply firms visited Ethiopia from October 20 to 21, as part of a UN facilitated
initiative. The visit was aimed at forming joint ventures (JVs) with local firms to manufacture drugs. The potential Chinese investment in Ethiopia
will take place in three phases. During the first phase, the companies will produce basic essential drugs for the local market while in the second
phase, various products will be produced for the export market. In the final phase, the Chinese companies will conduct knowledge transfers with
Ethiopian companies to support the local pharmaceutical industry, according to the delegation head and Vice President of China Chamber of
Commerce for Import and Export of Medicines and Health Products, Xu Ming (2Merkato.com).

Company Brief - Kilitch Drugs India Forms JV With Local Partner

21 Oct 2015 Ethiopia Pharmaceuticals & Healthcare

News: Kilitch Drugs India has established a joint venture (JV) in Ethiopia with a local partner to set up a pharmaceutical/nutraceutical manufacturing
plant in the African country, stated the company in a bourse filing. Kilitch Drugs will be a 97% partner in the JV, while the unspecified Ethiopian
entity will hold the remaining 3%.

Company Brief - Merck Launches Capacity Advancement Programme For Diabetes Management
13 Oct 2015 Ethiopia Pharmaceuticals & Healthcare Merck & Co

News: German drugmaker Merck has collaborated with the College of Health Sciences of the Addis Ababa University and the Ethiopian Diabetes
Association to launch a five-year 'Capacity Advancement Programme'. Under the programme, medical undergraduates and healthcare providers will
be provided with European accredited clinical diabetes management training, with the aim to improve the country's diabetes healthcare capacity.
The programme will train about 250-300 graduates annually and support many community awareness and prevention campaigns in the
country. 'Diabetes is on the increase in the country because of changes in our lifestyle. So far, we do not have national representative data but a
study that reveals the burden of the disease in the country will soon be released,' said director general of the Office of the Minster, Addis Tamire
(the Ethiopian Herald).

Industry Brief - Novartis Launches Affordable Medicines Portfolio

30 Sep 2015 United States Generic Drugs Novartis
Novartis has launched Novartis Access, a portfolio of 15 medicines to treat chronic diseases in low- and middle-income countries. The portfolio
addresses cardiovascular diseases, diabetes, respiratory illnesses and breast cancer, and will be offered to governments, non-governmental
organisations and other public sector healthcare providers for USD1 per treatment per month.

The portfolio includes patented and generic Novartis products and will be launched first in Kenya, Ethiopia and Vietnam. Novartis added that it plans
to roll the programme out to 30 countries over the coming years, depending on demand. The products included in the portfolio have been selected
based on the World Health Organization's Essential Medicines list and are amongst the most commonly-prescribed medicines in these countries.
Novartis commented that it expects the approach to be commercially sustainable over the long term, enabling continuous support in those regions.

Industry Trend Analysis - Market Will Continue To Attract Foreign Investors

22 Sep 2015 Ethiopia Pharmaceuticals & Healthcare

BMI View: Ethiopia's pharmaceutical market will continue to be viewed as an attractive investment destination by international drugmakers.
Numerous investment incentives will be taken advantage of by both generic and innovative drugmakers, with regards to gaining a direct and indirect
presence within the market.

We calculate that pharmaceutical expenditure in Ethiopia reached ETB8.98bn (USD457mn) in 2014. Ethiopia is one of the largest pharmaceutical
markets in Sub Saharan Africa (SSA); however, its huge population (96.5mn) means that per capita medicine expenditure at USD5 is one of the
lowest regionally and globally. Our growth outlook for Ethiopia's pharmaceutical market is positive, and will be driven by increasing health insurance
coverage, improvements in healthcare delivery and economic growth. By 2024, we forecast Ethiopia's pharmaceutical market to be valued at
ETB29.55bn (USD874mn), corresponding to a compound-annual growth rate (CAGR) of 12.6% in local currency terms and 6.7% in US dollar terms.
By this point, per capita spending on pharmaceuticals will have increased, albeit only slightly to just over USD7.

Investment Opportunities
Ethiopia: Pharmaceutical Market Forecast (ETBbn)
f = BMI forecast. Source: UN Comtrade, National Sources, BMI

Click here to explore data

Pharmaceutical Sector

The pharmaceutical market consists of 22 local companies which supply under 20% of the market by value, with the main players being Ethiopian
Pharmaceutical Manufacturing (EPHARM) and Addis Pharmaceutical Factory - the two oldest and largest companies, both of whom compete for
government tenders. Other local players include East African Pharmaceuticals and Sino Ethiop Associate, both of which export products to other
African and some Middle Eastern markets.

In terms of international companies, there are around 200 companies supplying the market via imports.
Multinationals GlaxoSmithKline (GSK),AstraZeneca and MSD have already managed to gain a strong position within both the public and private
sectors, with GSK announcing its intention to allocate Ethiopia as its manufacturing hub for East Africa in February 2015. Other multinationals with
a presence include Roche, Bristol-Myers Squibband Novartis. The majority of Ethiopia's pharmaceuticals are generic drugs supplied by Indian firms
including Cipla, Cadila and Lupin.
 Indian Drugs Dominate The Market
2014: Pharmaceutical Imports Into Ethiopia (USDmn)

Source: UN Comtrade, BMI

Opportunities For Drugmakers

Indirect Presence

BMI highlights a market opportunity for both generic and innovative drugmakers in Ethiopia. Although the emergence of a middle class has resulted
in lifestyle changes and a shifting disease profile towards non-communicable diseases, generic products still hold a dominant share of the market
in both value and volume terms, but the opportunity for high-value innovative drugs is growing. Highlighting this, blockbuster products
including Seretide(salmeterol and fluctcasone propionate), Crestor (rosuvastatin) and Nexium (esomeprazole) are all registered in the country.

Direct Presence
Ethiopia's government is taking an active role in promoting the development of the pharmaceutical and healthcare sectors and is actively facilitating
foreign direct investment. Foreign investments into the industry are matched by a loan from the Ethiopian Development Bank for up to 70% of the
investment value, and manufacturers are exempt from tax payments on 80% of imported materials. The government also favours local manufacturers
in its procurement of medicines; however, this is also the case in numerous other markets in the region.

Risks To Outlook

While we do highlight Ethiopia as an attractive pharmaceutical market for investment, there are associated risks to our outlook. The challenges
facing the country's pharmaceutical sector include human resource capacity constraints, limited access to foreign currency and difficulties in the
procurement of raw materials, all of which were listed by the country's Ministry of Health as impediments for foreign investors.

Company Brief - Medtech Ethiopia Acquires EPHARM To Curb Drug Shortages

09 Sep 2015 Ethiopia Pharmaceuticals & Healthcare

News: Ethiopian pharmaceutical firm Medtech Ethiopia has acquired the government-owned organisation Ethiopian Pharmaceuticals Manufacturing
Factory (EPHARM). The move is expected to reduce drug shortages in the country, and make EPHARM globally competitive. Medtech Ethiopia plans
to optimise the potential of this venture by expanding EPHARM facilities to a total of 63,000 sq m of land. The company also seeks to renovate eight
manufacturing lines of EPHARM over the coming five years in accordance with Good Manufacturing Practice guidelines, according to Medtech
Ethiopia CEO Mohammed Nuri. 'Any machinery that needs changing we will change, and any that needs upgrading, we will upgrade; all the while
maintaining the existing employees and giving them the relevant upgrades in training,' Nuri said (Healthcare Global).

Industry Trend Analysis - Pharmaceutical Sector Strategy To Benefit Domestic Industry

22 Jul 2015 Ethiopia Pharmaceuticals & Healthcare

BMI View: Ethiopia's long-term Pharmaceutical Manufacturing Sector Strategy and Action Plan will be successful in boosting the capacity of the
domestic industry as it focuses on numerous different methods of increasing production. The foreign industry will also benefit with investor friendly
incentives put in place to attract international pharmaceutical companies, and the government's plans to attract partnerships with foreign
drugmakers.

Ethiopia will remain reliant on importing the majority of its pharmaceuticals despite the government's long-term plan of becoming self-sufficient in
terms of medicine production. Ethiopia's government is aiming to make the country's pharmaceutical manufacturing sector fully good manufacturing
practices (GMP) compliant by 2025. These plans are outlined in its Pharmaceutical Manufacturing Sector Strategy and Action Plan (2015-2015)
published in July 2015.

Domestic Pharmaceutical Industry

There are currently nine pharmaceutical manufacturers operating in Ethiopia, supplying just under 20% of the local market, of which only two are
GMP-certified. These manufacturers have very limited product portfolios and are thought to supply only 90 of the 380 products on the national
essential medicines list. As such, imports represent the majority of the country's pharmaceutical market. Pharmaceuticals valued at USD310mn
were imported into Ethiopia in 2014, with India the main supplier accounting for just below 40% of these imports by value. The US and China follow,
supplying around 10% each. Ethiopian Pharmaceutical Manufacturing (EPHARM) and Addis Pharmaceutical Factory are the two oldest and largest
companies, both of whom compete for government tenders. Other local players include East African Pharmaceuticals and Sino Ethiop Associate,
both of which export products to other African and some Middle Eastern markets.

SELECTED INDICATORS OF PROGRESS AND TARGETS

Current 2020 2025

Manufacturers with GMP compliance 2 5 20

Essential medicines purchased from local manufacturers (%) 20 50 60

Number of WHO prequalified products produced locally 0 4 15

API manufacturers 0 1 3

Export of locally produced medicines by GMP-compliant producers (USDmn) 2 30 80

Joint ventures with international GMP compliant companies 3 8 15

Source: National Strategy and Plan of Action for Pharmaceutical Manufacturing Development in Ethiopia (2015-2025)

Implementation Outlook
 We view Ethiopia's goal to achieve five manufacturers with GMP compliance by 2020 as being achievable. We believe that Ethiopia will make
solid progress in this goal, and four companies are already being assisted by the German Corporation of International Development to apply
for GMP certification. However, the prospect of achieving 20 by 2025 seems fairly ambitious.

 The Food, Medicines, Healthcare Administration and Control Authority (FMHACA) is currently implementing the GMP Roadmap (2013-2018) in
order to improve the population's access to quality medicines. As such, we view the goal of boosting the percentage of essential medicines
purchased from local manufacturers as being achievable, in line with upcoming incentive policies designed to help local companies become
more competitive.

 We view the goal of increasing exports of locally produced medicines by GMP-compliant manufacturers to USD80mn by 2025 as being overly
ambitious, especially considering the current value of exports stands at USD2mn. However, we do forecast exports to more than double by
2019 to USD4.5mn by 2019, driven by improved capacity among domestic producers.

 In terms of joint ventures with GMP compliant companies, we also see this as an achievable goal. The government offers numerous incentives
to foreign investors within the pharmaceutical and healthcare sectors [1]
and recent investments in the country have been announced
by Cadila,Julphar, GlaxoSmithKline, Sandoz and Hikma, demonstrating an attractive environment for foreign investors in the sector.[1] BMI
Research (2015) Industry Trend Analysis - Foreign Investment Openness To Provide Expansion Opportunities. Published on: June 15 2015.

Industry Trend Analysis - Foreign Investment Openness To Provide Expansion Opportunities

15 Jun 2015 Ethiopia Pharmaceuticals & Healthcare

BMI View: Indian healthcare investors will take advantage of Ethiopia's openness to foreign investment within the industry. They will follow other
multinationals that have set up operations in the African country. Ethiopia's huge population, and hence medical product/service consumption
potential, will provide growth opportunities for foreign healthcare and pharmaceutical companies.

Ethiopia's healthcare sector is becoming increasingly attractive to international investors, with the country offering investment incentives to Indian
healthcare investors. Reports from May 2015 suggest that the country will acquire land and offer 100% foreign direct investment (FDI) to India for
setting up hospitals and other healthcare facilities. Ethiopia is an attractive prospect for consumer-focused investors given the huge population
(over 96mn people), and the current low level of GDP per capita.

Outbound Medical Tourism

Given the poor state of local healthcare services, many higher income Ethiopians choose to travel abroad for medical treatment, with India a popular
destination. According to Ministry of Health estimates, Ethiopians spent over USD30mn on healthcare expenditure abroad in 2012, with an estimated
10,000 outbound medical tourists. This growing demand is being met by increasing numbers of foreign hospital representatives in the country, with
over a dozen in Addis Ababa. Investment into more specialised healthcare infrastructure will aid in the reduction of outbound medical tourists from
Ethiopia, with the Korean-run Myungsung Medical Centre in Addis Ababa encouraging locals to stay in the country for medical treatment.

Pharmaceutical Sector Investment

The government in Ethiopia is also offering incentives to investors in the pharmaceutical industry planning to increase the market share of domestic
manufacturers to 50% by 2015. Foreign investment into the industry is matched by a loan from the Ethiopian Development Bank for up to 70% of
the investment value, and manufacturers are exempt from tax payments on 80% of imported materials. The government also favours local
manufacturers in its procurement of medicines. GlaxoSmithKline announced in February its plans to position Ethiopia as its pharmaceutical supply
hub for East Africa. The Ethiopian government drafted a new 10-year National Strategy and Plan of Action for the pharmaceutical sector in June
2015, in collaboration with the World Health Organization (WHO), aiming to attract FDI into the domestic industry.

Pharmaceutical and Healthcare Market Outlook

BMI values Ethiopia's pharmaceutical market at ETB8.2bn (USD417mn), with the market forecast to grow at a local currency compound annual
growth rate (CAGR) of 12.6% (6.7% in US dollar terms) to reach ETB27.0bn (USD798mn) by 2024. Pharmaceutical expenditure will be outpaced by
healthcare spending with the healthcare market forecast to grow at a CAGR of 15.1% in local currency terms (9.0% in US dollar terms), to reach
ETB207.3bn (USD6.13bn) by 2024, up from ETB50.9bn (USD2.59bn) in 2014. Private consumption will continue to grow strongly over the next five to
ten years, driving healthcare sector growth with out-of-pocket payments representing over a third of all spending. Private consumption and
infrastructure investment will be at the core of Ethiopia's economic growth, also driving pharmaceutical and healthcare sector growth.

Investment Opportunities
Ethiopia: Pharmaceutical Market Forecast (ETBbn)
f = BMI forecast. Source: UN Comtrade, National Sources, BMI

Industry Brief - Government And WHO Draft National Strategy For Pharmaceutical Sector
05 Jun 2015 Ethiopia Pharmaceuticals & Healthcare

News: The Ethiopian government, together with the World Health Organization (WHO), has drafted a new 10-year National Strategy and Plan of
Action for the pharmaceutical sector. The draft strategy aims to attract foreign direct investment to the country's pharmaceutical industry and create
a research and development platform to improve the access to safe, effective and quality medicines through better quality local production.
Additionally, the plan aims to build and boost the capabilities of local firms and institutions such as the Food, Medicine and Healthcare
Administration and Control Authority. Furthermore, the plan is aimed at improving the regulatory system and its ability to implement Good
Manufacturing Practice guidelines (2merkato.com)

Industry Brief - Novo Nordisk Extends Paediatric Diabetes Programme In Developing Countries
16 Apr 2015 Africa Autoimmune Novo Nordisk
Novo Nordisk has entered into a three-year extension of its Changing Diabetes in Children programme. Since 2009, free insulin and access to
diabetes care have been provided to more than 13,000 children in nine countries in Africa and South-East Asia. During this time, 108 diabetes clinics
have been established and 5,479 healthcare professionals have received diabetes care training.

The programme is run as a private-public partnership between Novo Nordisk, Roche, the International Society for Pediatric and Adolescent Diabetes
and the World Diabetes Foundation. In each country (Cameroon, Democratic Republic of Congo, Ethiopia, Guinea, Kenya, Tanzania and Uganda,
Bangladesh and India), the programme is implemented by a group of local partners with the national Ministry of Health playing a key role to ensure
that the programme is anchored within the existing healthcare system.

Each child in the programme receives insulin free of charge, along with strips and a glucometer to measure blood glucose levels. Because Type I
diabetes is a chronic condition which needs to be monitored closely, patient education for children and families and training of healthcare personnel
is also an essential part.

In Guinea, almost 400 children have been enrolled in the programme. The Changing Diabetes in Children programme will run until 2017.

Company Brief - Sandoz Launches Training Programme For Midwives

11 Mar 2015 Ethiopia Pharmaceuticals & Healthcare

News: Swiss drugmaker Novartis' affiliate Sandoz has launched a new training programme on March 3 2015 to improve obstetric knowledge among
midwives in Ethiopia, reports allAfrica. The programme, called the New Life & New Hope scheme, is aimed at reducing child mortality by improving
maternal and child health in the country. According to the Ethiopian Ministry of Health and USAID, approximately 400 mothers and newborns are
estimated to die during childbirth each day in the country. The programme will sponsor four Basic Emergency Obstetric and Newborn Care training
sessions for 100 healthcare professionals or midwives. The training imparted to 100 midwives is expected to positively impact the care of nearly
40,000 pregnant women in the Addis Ababa area. The training will be facilitated by the Ethiopian Midwives Association (EMA).

Company Brief - EPHARM Starts Construction On USD100mn Facility

26 Feb 2015 Ethiopia Pharmaceuticals & Healthcare

News: The Ethiopian Pharmaceutical Manufacturing Factory (EPHARM) has started construction on a new plant in Sebeta, Ethiopia, with an
investment of around USD100mn. The 40,000 square metre facility is in line with the international standard of good manufacturing standard
(GMS). The unit will sell medical products to other countries at competitive prices and will help generate foreign exchange revenues, according to
EPHARM's Chairman Mohammed Nuri. The new factory will increase the workforce from 600 to 1,500 after becoming operational. Meanwhile, the
pharmaceutical and medical equipment production capacity of EPHARM reached 62% in H114/15, according to the Ministry of Industry (allAfrica).

Industry Trend Analysis - Transparent Regulatory Environment To Attract Drugmakers

17 Feb 2015 Ethiopia Pharmaceuticals & Healthcare

BMI View: Ethiopia's pharmaceutical market has certain advantages over other emerging markets in Africa, including a transparent regulatory
environment and intellectual property regimen, and reduced trade of counterfeit medicines. The market does not come without challenges, and
weaknesses within the pharmaceutical supply chain have been identified, though multinationals are beginning to take note of opportunities within
Ethiopia's pharmaceutical market.

The Food, Medicine and Health Care Administration and Control Authority (FMHACA) of Ethiopia is the country's main regulatory body for the
pharmaceutical sector. The United States Agency for International Development (USAID) and Systems for Improved Access to Pharmaceuticals and
Services (SIAPS) have supported Ethiopia's FMHACA to strengthen its regulatory and enforcement capacity in a bid to deter the entry of counterfeit
drugs into the Ethiopian pharmaceutical market.

Regulatory Environment

Up until 2008, the FMHACA was incapable of effectively regulating the importation, storage, distribution and use of medicines outside of the capital
Addis Ababa. The FMHACA enlisted the help of Strengthening Pharmaceutical Systems (SPS) to provide financial, human and technical support to
build and staff office branches in five strategic locations around the country in Mekele, Bahirdar, Hawassa, Jimma and Diredawa. Consequently, the
FMHACA has greater access to health facilities in remote locations and more systematic and frequent inspections of ports of entry for counterfeit
medicines. Recent studies from East Africa reveal that the circulation of counterfeit drugs in Ethiopia is the lowest in the region.

Supply Chain

The government of Ethiopia established the Pharmaceuticals Fund and Supply Agency (PFSA) in 2007 with the aim of promoting sustainable, quality,
affordable and properly managed supplies of pharmaceutical, medical supplies and medical equipment. However, a study from 2012 published in
the Transactions of the Royal Society of Tropical Medicine and Hygiene journal showed that out of 48 hospitals and health centres surveyed, nine
did not possess drugs for malaria and tuberculosis and 10 did not have HIV medicines. [1] The results demonstrate an inadequate availability of
essential drugs in the surveyed facilities and a weakness in the pharmaceutical supply chain.

Intellectual Property Environment

Ethiopia is not a member of the World Trade Organization (WTO), though is expected to join in 2015. Patents are available for pharmaceutical
products for a duration of 15 years from the filing date, with the possibility of renewal for an additional five years. There also exists a 'patent of
introduction', which may be issued to an invention that has been patented abroad and not expired, but has not been patented in Ethiopia. This type
of patent can last up to 10 years.

An inefficient patent protection system can often deter multinational pharmaceutical companies from operating in emerging markets, such as
Ethiopia. Some international drugmakers are present in Ethiopia's pharmaceutical market, though these companies generally supply their drugs to
the market via local agents.

AstraZeneca, Bristol-Myers Squibb and GlaxoSmithKline (GSK) use Equatorial Business Group as their local distributor, with Roche using Samuel
Deressa. The majority of drugs in circulation are generics given the low purchasing power of the population, though the presence of multinationals
suggest that there is a market for patented medicines in Ethiopia as well. The announcement in February 2015 from GSK to position Ethiopia as its
manufacturing hub for East Africa demonstrates the strong growth potential of the country's pharmaceutical market.

Daniel G, Tegegnework H, Demissie T, Reithinger R (2012). Pilot Assessment of Supply Chains for Pharmaceuticals and Medical Commodities for
[1]

Malaria, Tuberculosis and HIV Infection in Ethiopia, Transactions of the Royal Society of Tropical Medicine and Hygiene; 106 (1): 60-62.

Industry Trend Analysis - Increasing Access Among Large Population To Drive Growth
16 Feb 2015 Ethiopia Pharmaceuticals & Healthcare

BMI View: Ethiopia's pharmaceutical market is becoming increasingly attractive. The government has identified the sector as a key industry and is
attempting to achieve universal health coverage through subsidised health insurance schemes. These schemes will increase the population's
access to health services and drive the demand for pharmaceuticals.

Ethiopia's pharmaceutical market was valued at ETB8.20bn (USD417mn) in 2014, according to BMI data. We forecast the market will grow at a local
currency compound annual growth rate (CAGR) of 14.5% (9.0% in US dollar terms) to yield a market size of ETB16.14bn (USD643mn) in 2019.

Healthcare expenditure totalled ETB37.71bn (USD1.92bn) in 2014, accounting for 4.29% of GDP and per capita spending of USD20 - among the lowest
in Africa. By 2019, we forecast expenditure to reach ETB72.92bn (USD2.91bn), corresponding to 4.01% of GDP and USD27 per capita.

Strong Growth Ahead

Ethiopia: Pharmaceutical Market Forecast (ETBbn)
f = BMI forecast. Source: UN Comtrade, National Sources, BMI

Click here to explore data

Healthcare System Overview

Poor financing is a key challenge for Ethiopia's healthcare system, with high out-of-pocket payments by the population - accounting for over a third
of total healthcare expenditure. Per capita healthcare expenditure remains below the World Health Organization (WHO) recommendation of USD30-
40 per person needed to cover essential healthcare. With 29% of the 96mn Ethiopian population living below the national poverty line and average
per capita incomes at under half the current sub-Saharan African average, lack of affordability is a considerable barrier to healthcare access in the
East African country. The low affordability levels among the population demonstrate that subsidised healthcare is essential to achieving universal
healthcare access in Ethiopia.

Healthcare Sector Reform

Ethiopia's healthcare sector is currently undergoing a significant reform programme, with the government issuing a health insurance strategy in
2008 with the aim of achieving universal health service coverage. The strategy prescribes compulsory social health insurance (SHI), community-
based health insurance (CBHI) and private health insurance schemes for different parts of society. BMI highlights that community-based health
insurance schemes are prevalent within Africa, with healthcare access in rural areas being a key to achieving universal access. In just over a year
following its implementation in 2011, the government-subsidised CBHI scheme had reached over 45% of target households, with studies
demonstrating a very high demand for the scheme. Over 40% of the population is expected to be covered by the end of the 2014-2015 fiscal year.

Pharmaceutical Manufacturing

Ethiopia offers an attractive manufacturing environment, as the government has identified the pharmaceutical sector as a key industry and is planning on
increasing the market share of domestic manufacturers to 50% by 2015. Foreign investment into the industry is matched by a loan from the Ethiopian
Development Bank for up to 70% of the investment value, and manufacturers are exempt from tax payments on 80% of imported materials. The government
also favours local manufacturers in its procurement of medicines, and a regional bioequivalence centre has been established at the Addis Ababa University in
the capital. Foreign pharmaceutical companies are realising the potential for manufacturing in Ethiopia, with UAE-based Julphar
Pharmaceuticals manufactIndustry Trend Analysis - Julphar Investment To Provide Commercial Gains

27 Jan 2015 Ethiopia Pharmaceuticals & Healthcare Gulf Pharmaceutical Industries (Julphar)

BMI View: A second investment into manufacturing in Ethiopia by Julphar Pharmaceuticals demonstrates an attractive environment for local
medicine production. The government's commitment to the industry's development and favourable conditions for manufacturing present
opportunities for drugmakers to take advantage of the rapidly growing Ethiopian pharmaceutical market. We highlight that generic drugmakers will
be best placed to set up operations due to the low purchasing power of the Ethiopian population.

The Ethiopian pharmaceutical industry and wider economy will be given a boost from the announcement in January 2015 that UAE-based Julphar
Pharmaceuticals will be investing further in the country to build a sterile injectable drug manufacturing plant. This will supply both the domestic
market and other African countries.

Expansion By Julphar

The drugmaker confirmed its USD50mn investment into an 11,000 square metre site and expects to be manufacturing insulin by the end of 2015,
producing sufficient quantities to meet demand in Ethiopia and across Africa. Julphar is already present in the Ethiopian pharmaceutical market
through a solid and liquid dose medicines manufacturing facility that opened in February 2013. Hassan Jibreel, senior director of corporate
development at Julphar disclosed that the company will host conferences in order to help local manufacturers build capacity by achieving Good
Manufacturing Practices (GMP) certification.

Manufacturing In Ethiopia
Domestic manufacturing supplies around a fifth of the local market demand, due to the basic nature of local manufacturers. Ethiopia relies on
imports for the majority of its medicines, which totalled USD552mn in 2013 according to data from UN Comtrade, with exports totalling a mere
USD0.67mn in comparison.

The pharmaceutical manufacturing industry consisted of 12 manufacturers in 2013, with Ethiopian Pharmaceutical Manufacturing (EPHARM)
andAddis Pharmaceutical Factory being the two oldest and largest companies, both of whom compete for government tenders. Other local players
includeEast African Pharmaceuticals and Sino Ethiop Associate, both of which export products to other African and some Middle Eastern markets.
Jordan-based Hikma is also looking to build a presence in the Ethiopian pharmaceutical market, having announced in September 2013 a joint venture
withMIDROC Pharmaceuticals to establish a USD22mn facility and distribution centre, due for completion in 2017.

Ethiopia presents an attractive manufacturing environment for pharmaceutical companies. The government has identified the pharmaceutical sector
as one of the key industries, and is planning to increase the market share of domestic manufacturers to 50% by 2015. Foreign investment into the
industry is matched by a loan from the Ethiopian Development Bank for up to 70% of the investment value, and manufacturers are exempt from tax
payments on 80% of imported materials. The government also favours local manufacturers in its procurement, and a regional bioequivalence centre
has been established at the Addis Ababa University in the capital.

Rapid Growth
Ethiopia: Pharmaceutical Market Forecast (ETBbn)
f = BMI forecast. Source: UN Comtrade, National Sources, BMI

Click here to explore data

Pharmaceutical Market Outlook

As one of the most densely populated countries in Africa, demand for pharmaceuticals is high in Ethiopia. BMI calculates that spending on
pharmaceuticals reached ETB8.2bn (USD417mn) in 2014, and we forecast this to increase to ETB27bn (USD800mn) by 2024, growing at a local
currency compound annual growth rate (CAGR) of 12.6% (6.7% in US dollar terms). Whilst in 2024 this will equate to one of the larger market sizes
in sub-Saharan Africa, the extremely low per-capita spending of USD6.54 will pose problems for innovative drugmakers looking to operate in the
Ethiopian pharmaceutical market.

uring locally since 2013 and GlaxoSmithKline (GSK) announcing its plans to position Ethiopia as its pharmaceutical supply hub for Africa in February
2015.

Company Brief - Merck Donates Drug For Treatment Of Schistosomiasis

19 Dec 2014 Ethiopia Pharmaceuticals & Healthcare Merck KGaA

News: Germany-based Merck KGaA will donate about 13mn praziquantel (biltricide) tablets for the treatment of schistosomiasis to Ethiopia in 2015,
as part of the Merck Praziquantel Donation Programme. The programme, in collaboration with the World Health Organization (WHO), aims to
eliminate schistosomiasis from Africa. Merck will donate 100mn praziquantel to African countries in 2015, and Ethiopia will be one of the main
beneficiaries of the donation, according to Merck's Head of Public Affairs Frank Gotthardt. Ethiopia is one of the worst schistosomiasis-affected
countries in the world, with about 22mn people - or more than 20% of the entire population - affected by the disease.

Industry Trend Analysis - Expanding Drugs List Highlights Commercial Opportunities

29 Aug 2014 Ethiopia Pharmaceuticals & Healthcare

BMI View: The rapidly expanding National Drugs List, heavy reliance on imported medicines and increasing emphasis on healthcare provide
opportunities for drugmakers looking to expand into the Ethiopian market. The country's robust economic growth trajectory and slowing inflation
also create favourableconditions, although the uncertain political environment and lack of skilled labour pose obstacles to investment.

The Ethiopian Food, Medicine & Healthcare Administration & Control Authority (FMHACA) has added 130 new drugs to the National Drugs List (NDL)
since the start of the year. The NDL now contains a total of 1,185 medicines. The number of drugs on the list has been steadi ly expanding since
2010, when 15 drugs were added. Data from the FMHACA showed that in 2011 there were 405 new additions, 446 in 2012 and 49 drugs added in 2013.
The new drugs added to the list include medicines used for the treatment of tuberculosis, bacterial infections, gastro-intestinal conditions and heart
diseases, among others.

The FMHACA initially considers the addition of a new drug to the list upon request from different bodies including the Pharmaceutical Fund & Supply
Agency (PFSA), importers and producers. Tests are then performed on product samples provided by the manufacturer. Finally, the producer is
granted a licence in order for the drug to be usable in the country for a minimum of four years.

In the past, the FMHACA controlled both the prices and quality of drugs. However, this is no longer the case according to the Regulatory Information
Development & Dissemination team coordinator, Debalke Fantaw. Fantaw has stated that the pricing of medicines is now decided by importers.

Of the recent additions to the NDL in 2014 India is supplying 58 drugs, Germany 15 drugs, Cyprus nine drugs and China eight. Medicines produced
in the UK, Malaysia, Jordan and Slovenia have also been added to the list. There are approximately 300 drug importers registered in Ethiopia.
According to the Director of Training and Education within the Pharmaceutical Industry Development Institute, Shumu Tefera, Ethiopia currently
imports 85% of its annual demand for pharmaceuticals, worth USD300mn.
In addition to the expansion of the NDL, the PFSA has acquired ETB3.1bn (USD156mn) worth of advanced medical equipment, which will be
distributed to five hospitals across the country. This equipment includes computed tomography (CT) scanners, magnetic resonance imaging (MRI)
and intensive care unit (ICU) machines, as well as anaesthesia and endoscopy machines.

BMI forecasts spending on pharmaceuticals in Ethiopia to increase from ETB5.35bn (USD286mn) in 2013 to ETB18.5bn (USD584mn) in 2023, growing
at a ten-year compound annual growth rate (CAGR) of 13.2% and 7.4% in local currency and US dollar terms respectively. Healthcare expenditure is
also forecast to undergo a rapid increase, from ETB33.1bn (USD1.8bn) in 2013, to ETB127bn (USD4.0bn) in 2023, resulting in ten-year CAGRs of
14.4% and 8.6% in local currency and US dollar terms respectively. Lower CAGRs in US dollar terms are forecast due to the weakening of the
Ethiopian birr.

Strong Growth Forecast

Pharmaceutical Market Of Ethiopia

f = BMI forecast. Source: BMI

Click here to explore data

Ethiopia will be one of the fastest growing economies in Sub-Saharan Africa over the coming years, and BMI forecasts average GDP growth of 6.0%
between and 2017. This expansion will be driven by sizeable public investment into infrastructure and agriculture, and an increasingly resilient
consumer sector.

Political risks will remain heightened in the country despite the reasonably trouble-free handover of power following the death of Meles Zanawi.
Increasing social tensions enhance the prospect of a step-up in domestic unrest, whilst a power struggle between the political elite may threaten
policymaking.

Industry Brief - Pharmaceutical Industry Faces Challenges In Meeting Local Demand

07 Aug 2014 Ethiopia Pharmaceuticals & Healthcare

News: Ethiopia's emerging pharmaceutical industry is facing challenges in meeting the rising local demand for medicines, according to the
Pharmaceutical Industry Development Institute training and education director Shumu Tefera. A total of 21 pharmaceutical factories currently
produce only 15% of the country's drugs requirement. 'The country imports 85% of its annual demand for pharmaceuticals worth USD300mn,' said
Tefera (World Bulletin). The lack of skilled human power, inadequate pharmaceutical education and absence of big laboratories are some of the
major hurdles faced by the industry. The Ethiopian government is planning to increase its pharmaceutical products to 45% in the coming six years
by involving private foreign companies, Tefera added.

Economic Analysis - African Lions: 10 Compelling Investment Opportunities

15 Jul 2014 Africa Economy

BMI View: 'African Lion' economies are poised for rapid growth over the long term, and investment opportunities abound. We highlight 10 such
opportunities across a range of industries.

BMI hosted a briefing entitled 'African Lions: Exploring Key Growth Markets' at the London Stock Exchange in June. We put forward our view that
although many of the leading economies in Sub-Saharan Africa (SSA) will encounter substantial political and economic headwinds over the coming
two years, the long-term growth story is intact and investment opportunities abound.

Nigeria is a case in point. The country faces a tense, divisive election in early 2015 that will test its democratic structures, but investors cannot
afford to ignore the immense opportunities presented. The vast, burgeoning consumer market will generate rapid growth in demand for goods and
services such as private healthcare and education. Meanwhile, the ongoing privatisation of the power sector will provide massive impetus to a range
of industries.
Kenya also presents huge investment possibilities despite the significant challenges faced. The economy is rapidly evolving towards higher value-
added goods and services, aided by technological advances such as mobile banking.

African Lions
Map - BMI's 'African Lion' Economies
Source: BMI. The selection of our 10 African Lions was based on a range of criteria including prospects for real GDP growth, political stability and the business
environment. See 'African Lions: Top 10 Growth Markets', December 2 2013 for further details.

Although each of our African Lions will undoubtedly go through its ups and down over the coming 10 years, the overall growth trajectory will be
positive and activity will proliferate across industry; major resource projects will create spillover effects for associated goods and services. Here,
we present 10 compelling investment opportunities that the region has to offer. Each has its nuances and risks, which are explored in detail in our
Industry Analysis on Business Monitor Online.

1) Gas Production In Mozambique: In the wake of huge offshore discoveries, Mozambique is destined to become a significant gas producer. The
greatest boost to output will come in 2020 with the large-scale development of deepwater discoveries to fuel a liquefied natural gas (LNG) plant. In
addition to the exciting prospects for the oil and gas sector, the infrastructure requirements (roads, pipelines, ports etc) to monetise such discoveries
provide attractive opportunities to a wide range of industries. Moreover, given the scale of discoveries to date, there should be ample supplies to
support both domestic industry and LNG needs. Gas production therefore yields opportunities for domestic industrial projects that can take
advantage of gas as feedstock: Gas-To-Liquids, gas power generation, methanol and fertiliser production, and liquefied petroleum gas projects.

Gas Boom Ahead

Mozambique - Gas Production, Consumption And Net Exports
f = BMI forecast. Source: EIA/BMI

2) Geothermal Energy In Ethiopia And Kenya: Kenya and Ethiopia are both taking steps to harness their underdeveloped geothermal resources
in a bid to diversify their power markets away from unreliable hydropower and costly oil imports. If developed successfully, this would provide
both countries with an indigenous and 'clean' baseload energy supply, while also helping to meet rising power demand and support energy-intensive
industries such as hydrocarbon exploration. Although funding continues to pour in from international financial institutions and development banks,
greater private sector involvement will be necessary in order to expand the nascent industries. Both countries are taking steps to encourage private
investment into the sector and we expect the respective governments to invite bids to develop new capacity over the coming years. We believe the
two countries will drive the East African Rift Valley geothermal expansion.
3) Infrastructure In Côte d'Ivoire: We are bullish about Côte d'Ivoire's infrastructure market, forecasting that the construction industry will grow
by 12.8% in 2014 and 12.1% in 2015 in real terms. In line with the country's USD22.8bn National Development Plan, significant public and private
investment is taking place and the country is set to see a rapid expansion of its transport and power networks. Government investment into
addressing the country's wide-reaching infrastructure deficiencies, following decades of underinvestment, is filtering through to projects, while
private investment is also picking up as political stability improves and the economy gains steam. In particular, we highlight the use of the public-
private partnership (PPP) model in developing major projects such as Abidjan Port, Henri Konan Bédié Toll Bridge and the Azito Power Plant.
4) IT Services In Ghana, Kenya And Nigeria: We have a positive growth outlook for the IT sector in Ghana, Nigeria and Kenya, on the back of
ongoing investments in broadband networks and rising demand for IT services from the financial, telecoms, energy and retail sectors. Since the
beginning of 2014, global IT firms SAP, Oracle, IBM, Hitachi Data Systems, Dimension Data and Business Connexion have all increased
their interest in the three countries' IT markets by establishing offices, building local partnerships and launching locally tailored products. Although
growth in the IT market is tightly correlated to economic growth, with businesses more willing to invest in IT hardware and services during times
of prosperity, these countries also benefit from strong government support for the sector. Ghana's government has been particularly proactive,
prioritising the development of e-governance programmes and, in May 2014, announcing a USD9mn investment to build state-of-the-art business
process outsourcing (BPO) centres in Accra to process data from state agencies within and outside Ghana.
Government And Economy Support IT Growth
Nigeria, Kenya, Ghana IT Market Growth, 2011-2018

f = BMI forecast. Source: BMI

Click here to explore data

5) Mobile Towers In Côte d'Ivoire, Ghana, Nigeria And Tanzania: SSA's mobile network operators' profits are being squeezed by declining
revenues from traditional voice services, and stricter quality of service requirements and rising demand for mobile services. In response, mobile
operators in Côte d'Ivoire, Ghana, Nigeria and Tanzania have cut operating costs by selling or offloading management of their telecoms towers to
independent towers firms. BMIhas a positive outlook for these countries' towers markets, as strong private consumption growth is supporting
rising demand for mobile voice and data services, while the presence of at least four mobile operators in each country should ensure a high tenancy
ratio on telecoms towers. In July 2014, Airtel joined other regional operators MTN, Orange and Millicom International Cellular (Tigo) to adopt
the tower outsourcing strategy, with the sale of 3,100 towers to Helios Towers. Airtel's decision to offload a total of 15,000 towers across the
continent has prompted MTN and Etisalat to sell their towers in Nigeria, a market where GSM operators have previously held out on divesting
infrastructure assets. We expect SSA's other major independent tower firms, IHS Towers, Eaton Towers and American Tower Corporation, to
express interest in the three operator's towers.
6) Oil Production In Angola: Angolan oil output is set for strong growth over the next 10 years. A spate of major projects is due to come online
by 2021, bringing around 1.2mn barrels per day of new capacity. Project delays are not uncommon in Angola, but the comparative stability of the
operating environment and the involvement of multiple industry heavyweights significantly limit the downside risks here. New upstream and
transport infrastructure will be needed to support the increase in output, and with the bulk of new production concentrated in deepwater and
technically challenging plays, growth will be heavily services-intensive. Local content requirements are minimally enforced, and given limited
domestic capacity, the opportunities that accrue to the foreign private sector will be substantial.
Strong Pipeline
Angola - Oil Production Forecasts, b/d '000s
Source: BMI

7) Pharmaceuticals And Healthcare In Nigeria: We see Nigeria as an untapped opportunity for pharmaceuticals and healthcare (P&H) in West
Africa, owing to prevailing socio-economic factors, the sheer size of the USD558bn economy and the possibilities for regional expansion. There
is a considerable market for healthcare services and goods within the country given the scale of private, out-of-pocket spending and the state's
embrace of PPPs. The four biggest factors driving spending growth in P&H are: a large disease burden of tropical and infectious diseases;
urbanisation and increasingly sedentary lifestyles from an enlarging middle class; increasing life expectancy and rapid population growth; and
large-scale infrastructure spending and rising incomes among consumers. We note that consumption of healthcare and pharmaceuticals in Nigeria
is overwhelmingly driven by private consumption (70% of total). Affordability will be the primary impediment to unlocking the Nigerian market.
Private Spending A Key Driver
Nigeria - Health Spending, USDbn
f = BMI forecast. Source: World Health Organization (WHO)/ BMI

Click here to explore data

8) Power Supply In Nigeria: Nigeria's power sector offers huge opportunities for resolute investors. Gas shortages and decrepit distribution
infrastructure are risks to market entry; however, our view is predicated on colossal untapped demand for power. Private sector investment is
necessary to support the construction of new capacity and meet surging electricity demand. The unbundling of Power Holding Company of
Nigeria (PHCN) and the transferral of the successor companies to the private sector indicates the privatisation process is gaining momentum. The
sale of 10 gas-fired power plants to the private sector is also proceeding and we believe independent power producers will increasingly enter the
market.
9) Telecare In Kenya: Mobile network operators in Kenya are well placed to take advantage of the services gap in other sectors of the economy
to deliver innovative telecoms crossover services that could provide sustainable long-term revenue growth and enhance customer loyalty. In
addition to the financial services sector which is benefitting m-commerce services, there are services gaps in the healthcare insurance sector. In a
low-tech, resource-limited environment such as Kenya, mobile health insurance will work well as it uses a technology that millions of people have
access to. Around 97% of the Kenyan population lacks access to affordable and timely healthcare because they are uninsured. Furthermore, rising
consultation fees, payments for laboratory tests and for drugs leave many citizens unable to pay the regular and mandatory monthly health insurance
premiums. This boosts the demand for micro-insurance products in a market in which the population is accustomed to mobile payments.
10) Vehicle Assembly In Nigeria: We see the new Nigerian Automotive Industrial Development Plan as the catalyst for reviving the country's
dormant vehicle production industry. We believe the remaining few domestic assemblers with capacity available from the previous wave of
production will capitalise on the speed with which carmakers want to set up local production operations. The timing is also favourable as a growing
middle class has boosted demand for vehicles. BMI data show car ownership has increased from 1.7 cars per 1,000 people to 6.9/1,000 in the
decade from 2003 to 2013, and will reach 9/1,000 by the end of our forecast period in 2018.

Industry Trend Analysis - Foreign Investment Openness To Provide Expansion Opportunities

15 Jun 2015 Ethiopia Pharmaceuticals & Healthcare

BMI View: Indian healthcare investors will take advantage of Ethiopia's openness to foreign investment within the industry. They will follow other
multinationals that have set up operations in the African country. Ethiopia's huge population, and hence medical product/service consumption
potential, will provide growth opportunities for foreign healthcare and pharmaceutical companies.

Ethiopia's healthcare sector is becoming increasingly attractive to international investors, with the country offering investment incentives to Indian
healthcare investors. Reports from May 2015 suggest that the country will acquire land and offer 100% foreign direct investment (FDI) to India for
setting up hospitals and other healthcare facilities. Ethiopia is an attractive prospect for consumer-focused investors given the huge population
(over 96mn people), and the current low level of GDP per capita.

Outbound Medical Tourism

Given the poor state of local healthcare services, many higher income Ethiopians choose to travel abroad for medical treatment, with India a popular
destination. According to Ministry of Health estimates, Ethiopians spent over USD30mn on healthcare expenditure abroad in 2012, with an estimated
10,000 outbound medical tourists. This growing demand is being met by increasing numbers of foreign hospital representatives in the country, with
over a dozen in Addis Ababa. Investment into more specialised healthcare infrastructure will aid in the reduction of outbound medical tourists from
Ethiopia, with the Korean-run Myungsung Medical Centre in Addis Ababa encouraging locals to stay in the country for medical treatment.

Pharmaceutical Sector Investment

The government in Ethiopia is also offering incentives to investors in the pharmaceutical industry planning to increase the market share of domestic
manufacturers to 50% by 2015. Foreign investment into the industry is matched by a loan from the Ethiopian Development Bank for up to 70% of
the investment value, and manufacturers are exempt from tax payments on 80% of imported materials. The government also favours local
manufacturers in its procurement of medicines. GlaxoSmithKline announced in February its plans to position Ethiopia as its pharmaceutical supply
hub for East Africa. The Ethiopian government drafted a new 10-year National Strategy and Plan of Action for the pharmaceutical sector in June
2015, in collaboration with the World Health Organization (WHO), aiming to attract FDI into the domestic industry.

Pharmaceutical and Healthcare Market Outlook

BMI values Ethiopia's pharmaceutical market at ETB8.2bn (USD417mn), with the market forecast to grow at a local currency compound annual
growth rate (CAGR) of 12.6% (6.7% in US dollar terms) to reach ETB27.0bn (USD798mn) by 2024. Pharmaceutical expenditure will be outpaced by
healthcare spending with the healthcare market forecast to grow at a CAGR of 15.1% in local currency terms (9.0% in US dollar terms), to reach
ETB207.3bn (USD6.13bn) by 2024, up from ETB50.9bn (USD2.59bn) in 2014. Private consumption will continue to grow strongly over the next five to
ten years, driving healthcare sector growth with out-of-pocket payments representing over a third of all spending. Private consumption and
infrastructure investment will be at the core of Ethiopia's economic growth, also driving pharmaceutical and healthcare sector growth.

Investment Opportunities
Ethiopia: Pharmaceutical Market Forecast (ETBbn)
f = BMI forecast. Source: UN Comtrade, National Sources, BMI

Yearly
Frequency:
Key Pharmaceutical ForecastsEthiopia - Pharmaceutical sales, USDbn20142015f2016f0.460.480.50.520.540.44Source: BMI
×Double click on any cell/row to annotate the table or to edit the annotation

Geography Indicator 2014 2015f 2016f

Ethiopia Pharmaceutical sales, USDbn, BMI 0.457 0.487 0.528

 Geography Indicator 2014 2015f 2016f

Geography Indicator

Ethiopia Pharmaceutical sales, USDbn, BMI

«1»

Show entries

Industry Trend Analysis - More Companies Will Look To Set Up Local Operations
21 Oct 2015 Ethiopia Pharmaceuticals & Healthcare

BMI View: More pharmaceutical companies will move to set up direct operations in Ethiopia, driven by investment incentives and favourable market
conditions including a large population, emerging middle class and rising non-communicable disease burden. Indian generic drugmakers will
continue to dominate the market, although investment opportunities exist for multinationals.

In support of our view that Ethiopia is becoming an increasingly attractive investment destination for international drugmakers, Indian
company Kilitch Drugs announced the formation of a joint venture with a local partner in October 2015. Kilitch will hold 97% of the JV and will set
up a pharmaceutical manufacturing unit. We have previously argued that Ethiopia's market offers an attractive investment destination for
pharmaceutical companies (see 'Market Will Continue To Attract Foreign Investors' , September 22).

Indian companies dominate Ethiopia's pharmaceutical market and the country is the largest supplier of pharmaceutical products to Ethiopia. The
development comes just four months after Ethiopia offered investment incentives to Indian healthcare investors to set up operations locally (see
'Foreign Investment Openness To Provide Expansion Opportunities', June 15).

Kilitch already has a presence in Ethiopia's pharmaceutical market, supplying ten injectable products (as of 2014). Setting up a local presence will
boost the company's African presence, and it already exports to numerous markets including Cameroon, Rwanda, Gabon, Nigeria and Côte d'Ivoire.
It appears as though Kilitch is positioning Ethiopia as its supply hub for Africa - as is reportedly the case with GlaxoSmithKline for East Africa. In
line with pharmaceutical manufacturers increasingly setting up in Ethiopia, we forecast Ethiopia to export significantly more pharmaceuticals -
predominantly to other African markets. By 2019 we forecast that exports will reach USD4.51mn - up from USD2.02mn in 2014; however, Ethiopia
will still be heavily reliant on drug imports which satisfy over 80% of the market by value.

Potential Pharmaceutical Supply Hub

Ethiopia: Pharmaceutical Export Forecast (USDmn)

Potential Pharmaceutical Supply Hub

Ethiopia: Pharmaceutical Export Forecast (USDmn)

f = BMI forecast. Source: UN Comtrade, National Sources, BMI

Industry Trend Analysis - Market Will Continue To Attract Foreign Investors

22 Sep 2015 Ethiopia Pharmaceuticals & Healthcare
BMI View: Ethiopia's pharmaceutical market will continue to be viewed as an attractive investment destination by international drugmakers.
Numerous investment incentives will be taken advantage of by both generic and innovative drugmakers, with regards to gaining a direct and indirect
presence within the market.

We calculate that pharmaceutical expenditure in Ethiopia reached ETB8.98bn (USD457mn) in 2014. Ethiopia is one of the largest pharmaceutical
markets in Sub Saharan Africa (SSA); however, its huge population (96.5mn) means that per capita medicine expenditure at USD5 is one of the
lowest regionally and globally. Our growth outlook for Ethiopia's pharmaceutical market is positive, and will be driven by increasing health insurance
coverage, improvements in healthcare delivery and economic growth. By 2024, we forecast Ethiopia's pharmaceutical market to be valued at
ETB29.55bn (USD874mn), corresponding to a compound-annual growth rate (CAGR) of 12.6% in local currency terms and 6.7% in US dollar terms.
By this point, per capita spending on pharmaceuticals will have increased, albeit only slightly to just over USD7.

Investment Opportunities
Ethiopia: Pharmaceutical Market Forecast (ETBbn)

f = BMI forecast. Source: UN Comtrade, National Sources, BMI

Click here to explore data

Pharmaceutical Sector

The pharmaceutical market consists of 22 local companies which supply under 20% of the market by value, with the main players being Ethiopian
Pharmaceutical Manufacturing (EPHARM) and Addis Pharmaceutical Factory - the two oldest and largest companies, both of whom compete for
government tenders. Other local players include East African Pharmaceuticals and Sino Ethiop Associate, both of which export products to other
African and some Middle Eastern markets.

In terms of international companies, there are around 200 companies supplying the market via imports.
Multinationals GlaxoSmithKline (GSK),AstraZeneca and MSD have already managed to gain a strong position within both the public and private
sectors, with GSK announcing its intention to allocate Ethiopia as its manufacturing hub for East Africa in February 2015. Other multinationals with
a presence include Roche, Bristol-Myers Squibband Novartis. The majority of Ethiopia's pharmaceuticals are generic drugs supplied by Indian firms
including Cipla, Cadila and Lupin.

Indian Drugs Dominate The Market

2014: Pharmaceutical Imports Into Ethiopia (USDmn)
Source: UN Comtrade, BMI

Opportunities For Drugmakers

Indirect Presence

BMI highlights a market opportunity for both generic and innovative drugmakers in Ethiopia. Although the emergence of a middle class has resulted
in lifestyle changes and a shifting disease profile towards non-communicable diseases, generic products still hold a dominant share of the market
in both value and volume terms, but the opportunity for high-value innovative drugs is growing. Highlighting this, blockbuster products
including Seretide(salmeterol and fluctcasone propionate), Crestor (rosuvastatin) and Nexium (esomeprazole) are all registered in the country.

Direct Presence

Ethiopia's government is taking an active role in promoting the development of the pharmaceutical and healthcare sectors and is actively facilitating
foreign direct investment. Foreign investments into the industry are matched by a loan from the Ethiopian Development Bank for up to 70% of the
investment value, and manufacturers are exempt from tax payments on 80% of imported materials. The government also favours local manufacturers
in its procurement of medicines; however, this is also the case in numerous other markets in the region.

Risks To Outlook

While we do highlight Ethiopia as an attractive pharmaceutical market for investment, there are associated risks to our outlook. The challenges
facing the country's pharmaceutical sector include human resource capacity constraints, limited access to foreign currency and difficulties in the
procurement of raw materials, all of which were listed by the country's Ministry of Health as impediments for foreign investors.

Industry Trend Analysis - Pharmaceutical Sector Strategy To Benefit Domestic Industry

22 Jul 2015 Ethiopia Pharmaceuticals & Healthcare

BMI View: Ethiopia's long-term Pharmaceutical Manufacturing Sector Strategy and Action Plan will be successful in boosting the capacity of the
domestic industry as it focuses on numerous different methods of increasing production. The foreign industry will also benefit with investor friendly
incentives put in place to attract international pharmaceutical companies, and the government's plans to attract partnerships with foreign
drugmakers.

Ethiopia will remain reliant on importing the majority of its pharmaceuticals despite the government's long-term plan of becoming self-sufficient in
terms of medicine production. Ethiopia's government is aiming to make the country's pharmaceutical manufacturing sector fully good manufacturing
practices (GMP) compliant by 2025. These plans are outlined in its Pharmaceutical Manufacturing Sector Strategy and Action Plan (2015-2015)
published in July 2015.

Domestic Pharmaceutical Industry

There are currently nine pharmaceutical manufacturers operating in Ethiopia, supplying just under 20% of the local market, of which only two are
GMP-certified. These manufacturers have very limited product portfolios and are thought to supply only 90 of the 380 products on the national
essential medicines list. As such, imports represent the majority of the country's pharmaceutical market. Pharmaceuticals valued at USD310mn
were imported into Ethiopia in 2014, with India the main supplier accounting for just below 40% of these imports by value. The US and China follow,
supplying around 10% each. Ethiopian Pharmaceutical Manufacturing (EPHARM) and Addis Pharmaceutical Factory are the two oldest and largest
companies, both of whom compete for government tenders. Other local players include East African Pharmaceuticals and Sino Ethiop Associate,
both of which export products to other African and some Middle Eastern markets.
 SELECTED INDICATORS OF PROGRESS AND TARGETS

Current 2020 2025

Manufacturers with GMP compliance 2 5 20
Essential medicines purchased from local manufacturers (%) 20 50 60
Number of WHO prequalified products produced locally 0 4 15
API manufacturers 0 1 3
Export of locally produced medicines by GMP-compliant producers (USDmn) 2 30 80
Joint ventures with international GMP compliant companies 3 8 15

Source: National Strategy and Plan of Action for Pharmaceutical Manufacturing Development in Ethiopia (2015-2025)

Implementation Outlook

 We view Ethiopia's goal to achieve five manufacturers with GMP compliance by 2020 as being achievable. We believe that Ethiopia will make
solid progress in this goal, and four companies are already being assisted by the German Corporation of International Development to apply
for GMP certification. However, the prospect of achieving 20 by 2025 seems fairly ambitious.

 The Food, Medicines, Healthcare Administration and Control Authority (FMHACA) is currently implementing the GMP Roadmap (2013-2018) in
order to improve the population's access to quality medicines. As such, we view the goal of boosting the percentage of essential medicines
purchased from local manufacturers as being achievable, in line with upcoming incentive policies designed to help local companies become
more competitive.

 We view the goal of increasing exports of locally produced medicines by GMP-compliant manufacturers to USD80mn by 2025 as being overly
ambitious, especially considering the current value of exports stands at USD2mn. However, we do forecast exports to more than double by
2019 to USD4.5mn by 2019, driven by improved capacity among domestic producers.

 In terms of joint ventures with GMP compliant companies, we also see this as an achievable goal. The government offers numerous incentives
to foreign investors within the pharmaceutical and healthcare sectors [1]
and recent investments in the country have been announced
by Cadila,Julphar, GlaxoSmithKline, Sandoz and Hikma, demonstrating an attractive environment for foreign investors in the sector.[1] BMI
Research (2015) Industry Trend Analysis - Foreign Investment Openness To Provide Expansion Opportunities. Published on: June 15 2015.

Industry Trend Analysis - Pharmaceutical Market To Post High Double-Digit Growth

17 May 2013 Ethiopia Pharmaceuticals & Healthcare
BMI View: The potential for returns on pharmaceutical investment in Ethiopia are great given the large population, favourable demographic and
epidemiological trends, as well as its position as a platform to expand into Kenya and Tanzania. However, we highlight the ease with which
counterfeit medicines can enter the country due to its proximity to China and India and low per capita medicine spending of US$4.2 - the lowest in
East Africa - as risks to drugmakers' revenue streams.

BMI forecasts total medicines sales (including prescription and OTC medicines) in Ethiopia to increase from ETB6.5bn (US$365mn) in 2012 to
ETB7.85mn (US$417mn) in 2013. Due to the depreciation of the birr, this equates to local currency and US dollar growth of 20.8% and 14.1%,
respectively. Over our five-year forecast period, Ethiopia's pharmaceutical market will post a local compound annual growth rate (CAGR) of
18.7% - the highest in the East African region.

Steady Growth To Come

Ethiopia's Pharmaceutical Market (US$bn)

f = BMI forecast. Source: BMI

In 2012, Ethiopia's pharmaceutical market was the third-largest in East Africa, behind Kenya (US$561mn) and Tanzania (US$421mn). We forecast
Ethiopiawill have the highest growth in local currency drug spending over the 2012-2017 period at 18.7%, which will see it surpass Tanzania's total
US dollar medicines market value by 2017, counterbalancing further depreciation of the birr over the next five years. However, we stress that the
country currently has the lowest pharmaceutical per capita spending in the region at US$4.2. Although this will gradually inc rease with a widening
middle class and increased urbanisation, we expect it to remain the lowest in the region over the next decade. This is a major disincentive to
investing in Ethiopia.

A Large Market Contender

The Pharmaceutical Markets Of East Africa In 2012

Source: BMI. CAGR = compound annual growth rate. Size of bubble = market expenditure.

Africa's Second-Largest Population

Ethiopia boasts the second-largest population in Africa at an estimated 86.5mn people, second to Nigeria's 166.6mn, which is expected to grow at
a rate between 1.5% and 2% over the next decade. Global demographic and epidemiological trends, including urbanisation, ageing populations,
rising chronic diseases and uptake of generic drugs, will strongly impact countries with large populations. Consequences include a rapidly
increasing demand for medicines, boosting the value of the pharmaceuticals market and providing commercial opportunities for local and
international drugmakers. In line with these global trends, BMI forecasts urbanisation to increase from 18.14% in 2012 to 21.7% in 2022 and the
pensionable population i.e. people above the age of 65 to increase from 3.4% to 4% of the total population over the next decade. This backdrop
provides a platform for significant growth in the country's pharmaceutical market.

Inflation Hits 24% In 2012

BMI calculates that pharmaceutical spending in Ethiopia as a percentage of GDP was 0.9% in 2012. This is below the long-standing historical value
of 1-1.5%. High inflation of 25% and 24% in 2011 and 2012 respectively has boosted the nominal value of pharmaceutical market. Nevertheless,
robust real growth for medicine expenditure underlines the strong demand in the African country. We expect pharmaceutical spending as a
percentage of GDP to return to approximately 1% over the long term, as inflation decreases to around 10% over our 10-year forecast period.

A Strong Foreign Investment Policy...

The Ethiopian government has made serious headway in improving investor sentiment in recent years, with a market-oriented economic policy, a
liberal investment law, and efficient service delivery by the Ethiopian Investment Commission, the main body that deals with foreign investors.
Policy reforms and the introduction of the new investment code have raised the possibility that Ethiopia could pull in substa ntially higher foreign
direct investment inflows in future years, as long as the wider political climate remains amenable.

...Draws UAE Drugmaker's First Global FDI Project

In February 2013, UAE-based drugmaker, Julphar, in conjunction with its local Ethiopian partner MedTech, opened its first overseas manufacturing
plant in the country. The facility, based in Addis Ababa, cost US$9.6m to build and produces 25mn bottles of suspension and syrup, 500m tablets
and 200m capsules annually, which will be exported throughout Africa. The company is also constructing a plant in Algeria via a joint venture with
the Algerian Ministry of Health, which will be completed in 2014.

As Julphar's first investment in manufacturing facilities outside the Middle East, this investment highlights the potential in Africa recognised by
drugmakers to drive revenue streams. In addition to taking advantage of Ethiopia's demographic and epidemiological factors, Julphar's fixed capital
investment will provide it with a platform to enter lucrative markets of Tanzania and Keyna. On the downside, we note that Julphar is entering
regional markets with a high counterfeit drug presence due to the ease with which East Africa is being penetrated by a number of Chinese and
Indian generic drugmakers.
BMI Political View: Despite the sudden death of Ethiopia's long-standing Prime Minister Meles Zenawi in August 2012, the smooth handover of power
and his successor's endorsement of the status quo should see stability and broad policy continuity preserved through to elections in 2015. That
said, political risks will remain heightened, with increasing social tensions raising the prospect of an uptick in domestic unrest, while a behind-
close-doors power struggle among the political elite could threaten policy-making.

BMI Economic View: Spearheaded by heavy public investment and supported by a steady pick-up in domestic demand, we expect the Ethiopian
economy to remain on a robust growth trajectory over the next few years. We are forecasting real GDP to expand at around 6.0% on average between
2013 and 2017, which although below the stellar growth rates witnessed over the last decade, remains high by regional standards.

Ethiopia Pharmaceutical Market Developments

In March 2013, an Ethiopian delegation of 11 members visited Ghana to under study the Ghanaian National Health Insurance Scheme (NHIS). Their
purpose is to aid Ethiopia in the establishment of a health financing mechanism, Roman Tesfay, the leader of the team, said. The high-powered
team, which started its one-week tour on March 22 2013, is scheduled to visit an ultramodern claims processing centre, NHIS call centre and NHIS
ICT installations and projects in Ghana. The team will also study some health insurance schemes.

In March 2013, a consolidated amount of US$120mn was approved by the World Bank to improve maternal and child healthcare coverage and enable
the country to continue its progress towards the 2015 Millennium Development Goals for health. The approval will allow the international bank to
disburse a US$100mn credit with zero interest over the next four years on completion of specific health results, particularly in areas of women and
child healthcare. The country's healthcare system will be benefitted by a grant worth US$20mn from the Health Results Innovation Trust Fund, which
supports the use of results-based financing to improve essential maternal and child health services.

In December 2012, Ethiopia rolled out a general medical hotline, dubbed HelloDoctor, aimed at improving healthcare access to the public. The
new hotline, the first of its kind in Ethiopia, charges a small fee from the mobile phone credit of a person in exchange for medical advice or a request
for home-care service. Ethiopia currently has one doctor for every 33,500 citizens; the WHO recommends no less than one doctor for every 10,000.

ndustry Brief - Four New Hospitals To Improve Healthcare Services In Oromia Region
04 Apr 2012 Ethiopia Pharmaceuticals & Healthcare

News: Four advanced hospitals are being built in the Arssi zone in Oromia, Ethiopia, costing more than ETB108mn (US$6.21mn), the Arssi health
department has said. Hadji Abdela, deputy head of the department, told the Ethiopian News Agency the hospitals are being constructed in Bekoji,
Kersa, Gololcha and Bele. The hospitals will help to improve healthcare services in the region, said Abdela. He added that construction of the
hospitals is likely to be completed within 18 months and they will serve more than 600,000 people.
ndustry Brief - Bill Gates Highlights Improvements In Healthcare Sector
03 Apr 2012 Ethiopia Pharmaceuticals & Healthcare

News: Ethiopia has achieved a noticeable improvement in the healthcare sector, according to Bill Gates. The Microsoft chairman, who visited the
country to discuss the Bill and Melinda Gates Foundation's activities with government officials and stakeholders, said the country has embarked
on a health expansion programme, which has created a better access to health services. The programme has resulted in a drop in the child
mortality rate and a rise in vaccination coverage, Gates said. The foundation aims to support people who need assistance with the health system
and food security, he added.

Company Brief - Roche Provides Grant For University To Improve Ethiopian Cancer Care
24 Jan 2012 United States Companies - Pharmaceuticals Roche

News: Roche has provided a grant to the Albert Einstein College of Medicine of Yeshiva University, New York City, to set up a programme to improve
basic cancer care in Ethiopia. The project's aim is to boost the capacity for providing cancer care in Ethiopia by ensuring standard protocols and
reporting, enhancing public awareness of the disease, improving patient navigation through the care system and establishing a pilot site for regional
cancer care centres at the Hawassa College of Medicine and Health Sciences in Ethiopia. The programme will also provide a basic cancer care
training programme for healthcare providers and surgical training for gynaecologists. There is an emphasis on reproductive cancers in women as
that is the greatest cancer need in Ethiopia and the patients are disproportionately young.

Company Brief - HCG To Establish New Cancer Care Centre

01 Aug 2011 Ethiopia Pharmaceuticals & Healthcare

News: Indian healthcare enterprise HealthCare Global Enterprises (HCG) is set to establish a cancer care centre in Ethiopia. The US$30mn cancer
care centre will allow the firm to offer better treatment to cancer patients in the country. According to Dinesh Madhavan, marketing director, HCG
will impart training on the latest advances in the treatment and management of cancer to doctors, nurses and paramedical staff. The enterprise
had previously entered an agreement with the African Union to begin cancer care treatment through video conferencing in all member states in
2009.

BMI View: BMI's Burden of Disease Database (BoDD) estimates that the number of disability-adjusted life years (DALYs) lost to cancer in Ethiopia
was 403,914 in 2010. We forecast that this will increase by approximately 15.8% to 467,933 DALYs by 2015 and by a further 55.0% to 725,522
DALYs by 2030.