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Lebanon Pharmaceuticals and Healthcare Report Q3 2011
Business Monitor International, June 2011, Pages: 82
The Lebanon Pharmaceuticals and Healthcare Report provides industry professionals and strategists, corporate analysts, pharmaceutical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Lebanon's pharmaceuticals and healthcare industry.
The Analysts View: Lebanon spends an abnormally large proportion of its national income on pharmaceuticals and healthcare, which makes the country highly attractive to international drugmakers. The Analysts believes that health tourism from across the region distorts the top line figures, in a similar way to Jordan, and this will continue to favour multinational drugmakers, while the country's domestic pharmaceutical industry remains unable to compete with imports. However, in terms of the wider operating environment, political and economic stability are not ensured. In fact, tensions between Israel and Hizbullah – an Iranian-backed Shi'a militia group and political party – are a constant threat, with the ever-present potential for renewed regional conflict. Still, we do not expect the collapse of the Lebanese government in early 2011 to alter our fundamental outlook on the economy in the near term.
Headline Expenditure Projections:
- Pharmaceuticals: LBP1,831bn (US$1.22bn) in 2010 to LBP1,968bn (US$1.31bn) in 2011; +7.4% in local currency terms and +7.2% in US dollar terms. Forecast up from Q211 due to new data on pharmaceutical distribution and retail mark-ups becoming available.
- Healthcare: LBP4,490bn (US$2.99bn) in 2010 to LBP4,885bn (US$3.25bn) in 2011; +8.8% in local currency terms and +8.6% in US dollar terms. Forecast up from Q211 due to macroeconomic considerations.
- Medical devices: LBP304.97bn (US$203mn) in 2010 to LBP331.48bn (US$220mn) in 2011; +8.7% in local currency terms and +8.5% in US dollar terms. Forecast up from Q211 due to macroeconomic considerations.
Business Environment Rating: Lebanon again ranks eighth of the 19 markets surveyed in the Middle East and Africa (MEA) region’s Q311 Business Environment Rating (BER) matrix. Although Lebanon’s rewards indicator remains firmly above the regional average, its risks score illustrates unresolved issues regarding the country’s regulation of pharmaceuticals as well as in terms of the wider operating environment, with ongoing concerns regarding the extent of red tape and corruption. This reflects the emerging nature of the country’s pharmaceutical market, even though there are few restrictions on foreign investment.
Key Trends & Developments:
- In March 2011, Kowa Pharmaceutical Europe, a subsidiary of Japanese pharmaceutical company Kowa, introduced its potent statin, Livazo (pitavastatin), in Lebanon. Beirut-based Algorithm, under an exclusive licence, will market the drug in Lebanon and in the other parts of the Middle East and North African (MENA) region from 2012.
The Analysts Economic View: Lebanon has a strong tradition of commerce and enterprise, with decades of emigration establishing extensive trade networks between Lebanese communities around the world. However, ongoing security problems pose downside risks to investor confidence and economic activity, with some of the required medicines continuing to be provided through donations, which distorts the overall market figures. Additionally, the urgent need for fiscal consolidation to reduce the debt burden could precipitate tax rises, which will negatively impact the ability of an average consumer to purchase necessary medicines and services, given that the private sector already pays for half of the overall healthcare bill in the country. We believe that parliamentary gridlock will prevents any further increase in public spending over the course of 2011.
The Analysts Political View: Political tensions mean the government's planned reform process will not be easy. Additionally, corruption remains widespread, although there have been signs of improvement. For example, in early 2011, the speaker of parliament signed a memorandum of understanding (MoU) with the CEO for the Westminster Foundation for Democracy to improve governance. The programme, which aims to strengthen parliament's legislative and budgetary oversight, will also work with MPs and establish a unit to provide technical support and advice for the finance & budget and administration & justice committees. This development may precipitate better funding for the healthcare system.
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