Lebanon Pharmaceuticals and Healthcare Report Q4 2009

Lebanon Pharmaceuticals and Healthcare Report Q4 2009

We expect total drug spending in Lebanon to increase from under US$500mn in 2008 to US$605mn in
2013, a compound annual growth rate (CAGR) of 3.9% in US dollar terms, with 1.75% of GDP dedicated
to pharmaceutical expenditure by 2013.
The Minister of Health, Mohammad Jawad Khalifeh, has held the position since 2005 and has
dramatically reformed drug pricing in the country, highlighting the fact that other countries in the region
with similar economies were paying significantly less for medicines than Lebanon. Following a lengthy
period of pressure, the government finally reduced average pharmaceutical prices by 5%, with the
momentum and support gained in the process providing the impetus for other regulatory changes,
including the introduction of transparency guidelines.
Public sector health provisions have been scrutinised and challenged by Khalifeh in light of high unmet
demand for subsidised services. He said the budget for the Ministry of Public Health in 2005 was only
3.5% of GDP and subsequently the department ran into deficit every year. While a small population will
restrict growth, we believe government subsidisation will do much to boost the drug market. More
affordable prices and access to hospitals will allow people to spend more on medicines instead of
forgoing treatment altogether.
Despite the price differences, there is little perceivable demand for off-patent drugs outside of the public
healthcare sector. However, the prescribing habits of doctors are a major factor in determining demand.
The lack of transparency and registration notification to physicians for new generic drugs exacerbates this
problem. While government websites aim to clarify which patented medicines have a generic equivalent
in the country, the low exposure of off-patent medicines to the patient is the reason the CAGR for this
sector is only 3.85% between 2008 and 2013.
The generic drug sector in Lebanon will experience slow growth over the next five years, largely due to
established partnerships between the private sector and the government in determining procurement
policies. Critics of the Ministry of Public Health have said that importers and wholesalers in the country
cannot profit as much from selling generic medicines as patented – an obvious incentive against ordering
cheaper drugs. In this sense, the pharmaceutical industry in Lebanon is not being regulated in favour of
the patient.
Another key issue is that the country lacks an internationally accredited drug testing and analysis
laboratory, and therefore relies on patented medicines as these are already approved by the US Food and
Drug Administration (FDA) or the European Medicines Agency (EMEA). Relying on international
regulatory standards is a means of assuring quality if the country does not have the means to do so itself.
The expense of reopening a laboratory that closed in 2007 remains off-putting and continues to inhibit
progress. However, Lebanon’s pharmaceutical sector cannot progress without a centralised drug testing
laboratory and as a result is set to remain restricted in terms of drug choice and market growth.

Executive Summary ....5
SWOT Analysis............7
Lebanon Pharmaceuticals And Healthcare Industry SWOT .. 7
Lebanon Political SWOT ... 8
Lebanon Economic SWOT . 9
Business Environment SWOT......... 10
Business Environment Ratings ...11
Table: Regional Pharmaceuticals Business Environment Ratings For Q409 ... 11
Limits To Potential Returns ........... 12
Risks To Realisation Of Returns .... 12
Market Summary .......14
Regulatory Regime....15
Public Sector Procurement ............ 15
Intellectual Property Regime ......... 16
IP Shortcomings. 16
Parallel Imports. 17
Counterfeit Drugs ............ 18
Free Trade Agreements.... 19
Pricing and Reimbursement Issues 19
Industry Developments..22
Epidemiology 22
HIV/AIDS Infections ........ 24
Healthcare Sector ............ 24
Hospital Sector .. 25
Healthcare Insurance ...... 26
Healthcare Sector Reforms ............ 27
Regional Developments ... 28
Pharmaceuticals Sector ... 29
Recent Pharmaceutical Industry Developments 30
Research And Development ........... 30
Medical Devices. 30
Industry Forecast Scenario ..........32
Overall Market Forecasts 32
Table: Lebanon – Drug Expenditure Indicators, 2003-2013 33
Key Growth Factors – Industry...... 34
Table: Lebanon – Health Expenditure, 2003-2013 ......... 35
Key Growth Factors – Macroeconomic ............ 36
Table: Lebanon Economic Activity, 2005-2013 38
Prescription Market Forecast ........ 39
Table: Lebanon – Prescription Market Indicators, 2004-2013 (LBPmn, unless otherwise indicated).... 40
OTC Market Forecast...... 41
Table: Lebanon – OTC Market Indicators, 2003-2013 (LBPmn unless otherwise indicated)............ 42
Patented Drug Market Forecast .... 43
Table: Lebanon – Patented Market Indicators, 2003-2013.. 43
Generics Market Forecast ............. 44
Table: Lebanon – Generics Market Indicators, 2003-2013 . 46
Pharmaceutical Export/Import Market Forecast ............ 47
Table: Lebanon – Pharmaceutical Export/Import Indicators, 2003-2013 (US$mn) ............ 48
Other Healthcare Data Forecasts.. 48
Table: Lebanon – Other Healthcare Data, 2003-2013 ... 48
Key Risks to BMI Forecasts ........... 49
Competitive Landscape.50
Company Profiles......51
Multinational Companies...... 51
Pfizer ............ 51
Novartis ........ 52
Merck & Co .. 54
Johnson & Johnson.......... 56
Sanofi-Aventis.... 58
Abbott Laboratories......... 60
Indigenous Companies.......... 62
Chalhoub Pharmaceuticals (CHAPHA)............ 62
Alfa Laboratories............. 63
Algorithm...... 64
Codipha ........ 65
Global Assumptions .66
Table: BMI’s Global Assumptions, 2007-2013 . 66
Table: Global And Regional Real GDP Growth, 2008-2011 67
Table: Developed Market Exchange Rates, 2008-2011 (average) ...... 68
Table: Key Emerging Market Exchange Rates, 2008-2011 (average against US$) ............. 68
Country Snapshot: Lebanon Demographic Data........69
Section 1: Population....... 69
Table: Demographic Indicators, 2005-2030..... 69
Section 2: Education And Healthcare. 70
Table: Education, 2002-2005 ........ 70
Table: Vital Statistics, 2005-2030.. 70
Methodology71
How We Generate Our Pharmaceutical Industry Forecasts 71
Pharmaceutical Business Environment Ratings Methodology .. 72
Ratings Overview............. 72
Table: Pharmaceutical Business Environment Indicators ... 73
Weighting...... 74
Table: Weighting Of Components.. 74
Sources 74