Summary
The steady annual growth of the Lebanese pharmaceutical market recorded in recent years has been severely disrupted by the 2006 conflict with Israel as well as by the more recent internal turmoil. While the stabilisation of the political situation will eventually normalise the market, its short-term prospects have been diminished. The situation is further complicated by the influx of donated essential medicines, which will distort market figures for this year.
Nevertheless, prescription medicines can be expected to dominate the market over the coming years, reflecting the relatively low income of the majority of the population, as well as the traditional reliance on hospitals as main points of care. Over-the-counter (OTC) drugs, which presently account for approximately 10% of the total by value, will witness some improvement towards the end of the forecast period, mainly driven by cost-containment initiatives and rising healthcare awareness. In the meantime, generic drugs will continue to account for a limited share of the total market due to a lack of awareness of their merits among both consumers and health professionals, and the dubious quality of some of the local products.
The adjusted BMI's Business Environment Rankings for the Middle East and Africa for Q307 again place Lebanon in 11th place, ahead only of Iran, Nigeria and Zimbabwe. BMI's judgement of the market potential is primarily negatively influenced by regulatory barriers such as lax intellectual property (IP) standards, as well as the country's uncertain long-term political climate. On the upside, the local manufacturing industry is limited, producing mainly basic medicines, which provides considerable potential for the expansion of foreign company operations, in order to meet the demands of the rapidly growing population. However, counterfeiting remains rife, severely impacting sales for multinational companies, which also have to contend with a sizeable volume of parallel trade.
BMI forecasts that the Lebanese drug market will be worth US$608mn at retail prices by 2011, up from US$475mn in 2006 and still small in comparison to other regional and global markets. While drug prices in the country remain relatively high by regional standards, the government's proposal to implement a new pricing system based on the reference prices of drugs in similar markets around the world will serve to dent market revenues over the coming years, despite improving volumes.
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