Lebanon Pharmaceuticals and Healthcare Report Q2 2008

Lebanon's pharmaceutical market continues to be adversely affected by internal instability - first the 2006 conflict with Israel and more recently the lack of political leadership. The 2006 war severely dented Lebanon's infrastructure, while the uncertain political situation continues to deter foreign investment.

Lebanon's pharmaceutical market was estimated to be worth US$472mn in 2007. Growth is expected to remain subdued, averaging 4% year-on year (y-o-y) through the forecast period.

Healthcare provision is dominated by the private sector, with only 8% of the population benefiting from government-run primary care facilities. Political instability appears to be aiding the development of the private sector as the public system is hampering the function of the public sector. Hospitals remain the main place where patients access healthcare meaning prescription drugs should continue to dominate the market. However, rising health awareness should lead to stronger growth in the over-the-counter (OTC) drug market - particularly in the latter part of the forecast period.

The patented drug market is relatively large when compared with the poverty of most citizens. This is partly due to a widespread distrust of non-branded drugs by doctors and patients and lack of government incentives for the substitution of patented drugs with cheaper generic alternatives. The situation is not helped by the underdeveloped nature of local manufacturing, which means that most drugs must be imported despite the 15% price advantage offered to locally-made drugs in government tenders.

In BMI's adjusted Business Environment Rankings for the Middle East and Africa, Lebanon is placed 11th out of 13 markets surveyed. It received a score of 42 out of a possible 100 - unchanged from Q108.

The relatively low pharmaceutical market growth forecast and small overall market size serve to depress Lebanon's overall score. In addition, serious intellectual property (IP) concerns and a biased reimbursement policy contribute to Lebanon's poor showing.

Lebanon, in common with other Middle Eastern states suffers from a growing chronic disease burden, with the prevalence of cardiovascular disease particularly high. However, in contrast to other Middle Eastern states that have made progress in reducing their infectious disease burden, conditions such as acute respiratory infections remain common in Lebanon.