Industry Trend Analysis - Preventative Health Measures An Increasingly Popular Government Tool - APR 2018

BMI View: Rising income levels and a shift towards more westernised lifestyles in emerging markets will continue to lead to the purchase of unhealthy convenience foods and sugary drinks, resulting in the rapid increase of chronic disease prevalence, and therefore pushing governments towards dietary taxation. While traditionally this tool has been more common in developed markets, governments in emerging markets will be motivated to implement these taxes as a means to fund healthcare projects, which are critical for authorities in Sub-Saharan African markets that are in the midst of expanding universal healthcare. This will present ample opportunities for multinational drugmakers to become more engaged in the process of healthcare delivery in key markets.

Preventative healthcare measures will be increasingly leveraged upon in South Africa. The rise of chronic diseases, namely diabetes and cancer, is among the key drivers of the government's introduction of a sugar tax - on course to be implemented on April 1 2018. The National Council of Provinces (NCOP) passed the tax on sugary drinks in December 2017, which followed continuous delays and negotiations. While this mirrors a global trend of dietary taxation, with Saudi Arabia and the UAE being recent examples ( see 'Sugar Taxes: Latest Developments & Analysis', September 7 2017), we believe the implementation of taxes on sugary foods will gain momentum over our forecast period and have a disproportionate impact on low- and low-middle income consumers. According to our Consumer team, South Africa's sugar consumption exceeds that of the top ten consumers in Sub-Saharan African (SSA), reaching 34.6kg per capita in 2017, while the top ten average was 15.1kg per capita.

Diabetes: A Costly Chronic Disease

South Africa Presents Greatest Opportunity
Southern Africa: Prevalence Of Diabetes In 2017 & 2040 (%)
Source: International Diabetes Federation, BMI

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