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Lebanon Pharmaceuticals and Healthcare Report Q1 2012
Business Monitor International, Dec 2011, Pages: 90
Business Monitor International's 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.
BMI View:
The attractiveness of the Lebanese pharmaceutical market is underpinned by the improving regulatory environment and the relatively high per capita spending on medicines. Additionally, despite some degree of regulatory bias in favour of local producers, imports will continue to supply the bulk of the market, as low-value generic drugs remain marginalised by the population’s traditional preference for branded products. BMI, therefore, expects Lebanon’s pharmaceutical trade balance to shift further towards imports, even though some local manufacturers are increasingly targeting foreign markets.
Headline Expenditure Projections:
- Pharmaceuticals: LBP1,729bn (US$1.15bn) in 2010 to LBP1,805bn (US$1.20bn) in 2011; +4.4% in local currency terms and +4.2% in US dollar terms. Forecast down from Q411 due to macroeconomic factors and analyst intervention.
- Healthcare: LBP4,592bn (US$3.06bn) in 2010 to LBP4,975bn (US$3.31bn) in 2011; +8.3% in local currency terms and +8.1% in US dollar terms. Forecast down slightly from Q411 due to macroeconomic factors.
- Medical Devices: LBP355bn (US$236mn) in 2010 to LBP408bn (US$271mn) in 2011; +14.9% in local currency terms and +14.7% in US dollar terms. Forecast down slightly from Q411, while 2010 values lowered on the back of new 2010 import data.
Business Environment Rating:
Lebanon again ranks eighth – now out of the 30 markets surveyed in the Middle East and Africa (MEA) region’s Q112 Business Environment Rating (BER) matrix. However, its composite score is some 3% lower quarter-on-quarter (q-o-q), due to the reassessment of the country’s industry rewards component. Generally speaking, Lebanon’s rewards as well as risks profile is illustrative of the emerging nature of the country’s pharmaceutical market, although both its rewards and risks scores are superior to the regional averages.
Key Trends & Developments
- In a positive sign for the country’s pharmaceutical exports, Lebanese drug companies will be able to compete with foreign producers for a larger share of the domestic market with the implementation of new quality standards in the pharmaceutical industry, the World Health Organisation (WHO)'s representative in the country, Sameen Siddiqi, said in October 2011. During a WHO workshop to introduce new good manufacturing practices, Siddiqi said that the new standards are expected to make local drugmakers more competitive and cut healthcare costs in the country. The new standards will stipulate that companies increase the safety and quality of pharmaceutical products.
- A new pharmaceutical facility in Chouf, Lebanon, will begin operations in 2012, reported The Daily Star in August 2011, citing the head of the Investment Development Authority of Lebanon, Nabil Itani. He reportedly added that the facility will generate various promising investment opportunities. Pharmaceutical products produced at the facility are likely to be exported to other Arab regions as well as to Africa.
BMI Economic View:
Consumer price inflation (CPI) in Lebanon will trend lower in 2012, as the ongoing downtrend across the global commodities complex and weaker economic activity domestically weighs on headline CPI prints. BMI projects average annual consumer price inflation of 4.4% y-o-y in 2012, down from an estimated 5.3% in 2011. This will be significant as around half of the country’s healthcare expenditure is sourced from non-government expenditure. The main upside risk to BMI's forecast stems from the potential for a greater ramp up in government spending than currently expected.
In addition, BMi's outlook on the strength of the Lebanese economy also remains relatively downbeat, which will impact the development of healthcare and pharmaceutical values. BMI has downgraded its forecast for real GDP growth to 1.6% from 3.3% previously. The slowdown in growth will be broad-based, with consumption, investment and trade all set to suffer in 2011.
BMI Political View:
Political stability will remain hard to come by in Lebanon over the coming decade. However, despite the range of challenges facing the government, BMI believes that major political upheaval will not occur without an external trigger, with a military conflict the most obvious candidate. In fact, Lebanon's cabinet has recently decided to increase the minimum monthly wage by 40%, to LBP700,000 (US$467), compared with the present level of LBP500,000 (US$333.57), according to Information Minister Walid Daouk.
The decision has been taken as an effort to avert a nationwide strike, which was planned to be held on October 12 2011. However, although the strike has been suspended, the wage increase is still unsatisfactory, according to General Labour Confederation Chief Ghassan Ghosn.
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