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Israel Pharmaceuticals and Healthcare Report Q4 2011
Business Monitor International, Sep 2011, Pages: 99
Business Monitor International's Israel 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 Israel's pharmaceuticals and healthcare industry.
BMI View: Both regionally and globally speaking, Israel boasts high per-capita spending on pharmaceuticals, although the overall market size is limited by the country’s modest population of under 8mn. Israel also has well-developed pharmaceutical (focused on generic drugs) and medical device manufacturing industries, which largely export to Europe and North American markets rather than to its neighbours, due to political considerations. However, multinationals operating in Israel have been critical of the country’s intellectual property (IP) environment, with Israel now reinstated on the Pharmaceutical Research and Manufacturers of America (PhRMA)’s Special 301 submission’s Priority Watch List for 2011.
Headline Expenditure Projections
- Pharmaceuticals: ILS6.72bn (US$1.80bn) in 2010 to ILS6.99bn (US$2.07bn) in 2011; +4.1% in local currency terms and +15.0% in US dollar terms.
- Healthcare: ILS59.77bn (US$16.01bn) in 2010 to ILS62.12bn (US$18.38bn) in 2011; +3.9% in local currency terms and +14.8% in US dollar terms.
- Medical devices: ILS3.66bn (US$980mn) in 2010 to ILS3.84bn (US$1.14bn) in 2011; +4.9% in local currency terms and +15.9% in US dollar terms.
Business Environment Rating: Israel ranks third of the 19 key markets surveyed within our proprietary Q411 Business Environment Rating (BER) matrix for the Middle East and Africa (MEA). Its composite score for the quarter is 57.8 out of the maximum 100. The country’s Risks score of 48 stands just above the regional average of 47, dragged down by the shortcomings of its regulatory environment and its stance towards intellectual property (IP) protection. Its rewards score is fifteen points higher than the regional average for the quarter (49), supported by a high urban population component and high per capita spending on medicines.
Key Trends & Developments
- In Q211, despite spending US$5.2bn on mergers and acquisitions (M&A) in 2010, leading Israeli drugmaker Teva Pharmaceuticals only reported an 11% increase in year-on-year (y-o-y) net sales to US$4.21bn and a 27.8% fall in net income over the same time period to US$576mn. Teva's Q211 results are unimpressive but expected given the company's poor Q111 performance. However, BMI remains positive about the company's long-term future as austerity measures and rational prescriptions increase generic drugs sales in developed states and the company's revenues from Europe continue to grow rapidly.
- In July 2011, shareholders of US-based biopharmaceutical company Cephalon approved Teva’s US$6.8bn proposed acquisition. The deal will add Cephalon's cancer painkiller Fentora(fentanyl buccal), sleep disorder drug Provigil (modafinil) and chemotherapy drug Treanda (bendamustine) to Teva's branded business. The deal, under review by the European Commission and the US Federal Trade Commission, is likely to be completed by end-2011. Teva has also completed the acquisition of Taiyo Pharmaceutical Industry in a US$943mn deal.
BMI Economic View: Economic activity in Israel will decelerate slightly through the end of 2011, and we project real GDP growth of 4.8% and 4.5% in 2011 and 2012 respectively, up from 3.8% and 3.3% previously. Private consumption and exports will lead the expansion, with government expenditure and fixed capital investment expanding at a slower pace. BMI caution that elevated political risk poses downside risks to their forecasts.
BMI Political View: Israel's new coalition government has become more conservative in its domestic policy stance and more hawkish in its foreign policy position, as we had anticipated. BMI believe conservative governments are likely to remain in power over the medium-to-long term, as support for these parties is widespread and is likely to grow. BMIs short-term political risk rating is 66.3 out of 100.0.
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