Industry Trend Analysis - Change In Health Minister To Have Limited Impact - MAR 2017
BMI View : Prime Minister Malcolm Turnbull's cabinet reshuffle in January 2017 will not see a significant change in Australia ' s healthcare landscape. Greg Hunt, the new minister for health, will inherit a medical system that faces significant challenges, particularly over rising healthcare spending. This is exacerbated by lobbying from the various interest groups that will make policy formation highly challenging, perpetuat ing the uncertain operating environment for multinational pharmaceutical firms.
Australia's business environment will remain challenging for multinational pharmaceutical companies despite the change in health minister. This cabinet reshuffle was prompted by Sussan Ley's resignation from her role as health minister in January 2017 after admitting that four of her travel claims failed ministerial standards, including a taxpayer-funded trip to the Gold Coast. According to BMI's Country Risk team, this incident highlights the internal troubles facing the ruling Liberal-National coalition, which will distract the party from enacting policies to improve the business environment . This reinforces our Short-Term Political Risk Score - defined as the government's ability to propose, pass, implement and enforce its chosen legislation over the next two calendar years - at 75.6, lower than other developed markets such as Singapore (94.8), Japan (86.5) and New Zealand (84.0).
Taking her place will be former minister for industry, innovation and science, Greg Hunt, who had experience dealing with the pharmaceutical sector in his previous position. Shortly after his appointment was announced, Medicines Australia - which represents the innovative pharmaceutical industry - put out a statement congratulating Hunt, and noted that they welcome the opportunity to collaborate with him to develop an 'environment that maintains the viability of the medicines industry in Australia'. We highlight that this development is unlikely to significantly affect the growth rate of medicine sales in Australia, and we will maintain our forecast. We are currently projecting medicine sales to rise from AUD14.8bn (USD10.9bn) in 2016 to AUD18.0bn (USD11.9bn) by 2026, at a compound annual growth rate of 2.1% in local currency terms and 0.8% in US dollar terms.
|Policy Making To Face Headwinds|
|Selected Asia Pacific Markets: Short-Term Political Risk Rating*|
|*Scoring out of a 100. Source: BMI|