Lebanon Pharmaceuticals & Healthcare

Summary

The Lebanese pharmaceutical market has shown solid growth in recent years, with annual expansion of 6-7%, although this positive trend has been interrupted by the recent conflict. Particularly damaging has been the Israeli blockade, considering that Lebanon is reliant on imports for around 95% of pharmaceutical consumption. Prescription drugs dominate the market, with OTC drugs accounting for approximately 10% of the market. Generic drugs take only a small market share due to a lack of awareness of their merits among both consumers and health professionals.

BMI forecasts that the Lebanese drug market will be worth US$612.5mn at retail prices by 2010. Per-capita drug expenditure is expected to reach US$154.4 in 2010. Drug prices in the country remain relatively high by regional standards. However, the government is said to be considering implementing a new pricing system, which would be based on the reference prices of drugs in similar markets around the world. This is unlikely to encourage multinational sector investment, but will enhance public access to medicines. Only about 62% of Lebanese have health insurance - either public or private - to help cover their drug costs.

BMI's adjusted Business Environment Rankings for the Middle East reveal that Lebanon is in the joint 10th place with Egypt, ahead only of Iran, Nigeria and Zimbabwe. This is primarily due to a number of regulatory barriers such as lax intellectual property (IP) standards. Lebanon's uncertain long-term political and economic climate also has a negative impact on the country's business environment rankings. The pharmaceutical market is set to be severely impacted by the conflict between Israel and Hizbollah. Exports and imports suffered severely across all industry sectors due to the Israeli blockade of ports and airports, which lasted from July to September 2006. Meanwhile, a fall in purchasing power will affect drug market sales.

In the future, Lebanon will have to tighten its IP regime if it wishes to attract greater foreign direct investment (FDI), and help its local industry to develop. Currently, the IP regime falls short of international standards, particularly in areas such as data exclusivity and pipeline protection. Counterfeiting is also rife, severely impacting sales for multinational companies. As a result, these are more likely to raise prices, in order to recoup losses, or economise in other areas such as R&D.

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